How To Cut And Control Expenses

Oct 30, 2009

It's clearly difficult to increase revenue today, but cutting costs can be just as, or even more effective than attempting to grow the company.  With a 10% net margin - if you can reduce costs by $10,000 - that's like increasing revenue $100,ooo.  Here are twelve ideas you can implement today..

Cut Expenses

  1. Challenge every expense - who authorized it, is it needed, can it be reduced?
  2. Assume you are spending too much - never let go of this way of thinking.  As soon as you do, expenses will start to sky-rocket.
  3. Understand cost categories: Strategic vs Non strategic - can you reduce costs without affecting your future.  Direct vs Indirect -  are costs driven by sales directly, or are they harder to pin down to specific products?  Fixed vs Variable - are costs increasing your break-even or do they vary with revenue?

Budget Expenses

  1. Take some time to really understand what you spend.  Review vendors and average monthly expenses. 
  2. Categorize and drill down on expenses.  
  3. Create a monthly budget and report against it
  4. Develop scorecards/ dashboards to maintain focus

Compare Expenses

  1. Benchmark your expenses against high performers in the industry
  2. Bid out your largest costs on a rotating basis

Control Expenses

  1. Assign an expense line to an owner.  
  2. Break costs down by department and manage against department budgets.
  3. Keep an eye on purchasing and credit cards.  Make sure charges are analyzed. 
  4. Hire a B2B CFO

As noted, it's often easier to control expenses then find new revenue. 

For more information, contact David Kirkup, B2B CFO Partner on 404 348 0326 or dkirkup@b2bcfo.com.

 

 

 

 

 

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