If your dollars are not stretching as far as they used to, chances are you’ve allowed “budget creep” to infiltrate your company’s resources. I want to teach you how to eliminate that problem – fast!
First, a quick review. Last time we discussed how to increase your margins by taking a premium price position, negotiating lower costs from manufacturers, and watching your inventory more closely. I told you that if there’s ONE THING you could do to immediately improve your revenue, it was increasing your prices.
If you are having trouble doing that – if you think your clients won’t be able to “handle” it – then do yourself a favor: pick up the phone and call me right now. I will help you take that action in such a way that your business improves dramatically without the negative consequences you fear.
Today, I am going to walk you through some strategies to help free up cash for your business. While thinking about these strategies, remember:
TREAT SMALL EXPENSES LIKE BIG MATTERS.
The bigger your business is – and the more people, projects, and activities you’re managing at a time – the more difficult it can be to ensure that your money is working hard for you!
If you’re like most business owners, the big dollar expenditures get your attention, but smaller spends – those nickels, dimes, and quarters – can slip unnoticed under the radar. And that change accumulates faster than you think.
I have found that plugging the leaks in your cash flow can easily add 10% or more to your bottom line. So, it’s time to pay attention to those small expenses and save yourself big money.
Here’s how to do it:
1. Change the way you think about overhead expenditures. What I am about to say may constitute a radical shift in the way you think about your business, but I’ve seen it free up tens (or even hundreds) of thousands of dollars in my clients’ companies each year. Here it is:
There is no such thing as a “cost of doing business.”
Yes, you read that right. If you are running your business correctly, “overhead expenditures” do not exist!
As Peter Drucker says, a business exists to do two things and two things only: GET AND KEEP CLIENTS. That means you need to treat each expenditure as if it were an investment…because it is.
2. Evaluate each of your current investments. Look at where you’re spending each month and apply Drucker’s advice by asking yourself: How does this contribute to getting or keeping a client?
The answers will be eye-opening.
As you go through the list, you’ll get some clear “yes” investments, some clear “no” investments, and some “don’t know.” Table the “don’t know” investments for later.
3. Drop all the “no” expenses. When you find expenditures that are neither bringing in new business or helping you keep existing business, drop them. Fast!
4. Go back to the “don’t know” expenses. After you’ve freed up significant revenue by dropping expenses that aren’t paying off, you can go back to the “don’t know” group and re-evaluate. If you find yourself on the fence about a given item, ask this second question (again from Peter Drucker): If I weren’t already doing this, would I start today? The answer will help you determine whether you should continue investing your company’s financial resources in that area.
5. Teach your employees this method for evaluating future investments. One of the most powerful things you can say to your team when they bring you new expenses is this: Interesting idea. And how will that help us get or keep clients? Really listen to what they have to say, then make your decisions accordingly.
Your assignment is to go through your budget, step-by-step, and make the necessary cuts in your business. Chances are, by the time you’re through you’ll have freed up some much-needed cash!
If you would like help cutting costs (or with any other aspect of running an efficient, successful business), get in touch with me. You can call me direct at 506 872 2900, send me an email, or CLICK HERE to book a FREE 30-minute appointment to discuss anything you’d like more information about. We will review your individual situation and help make profound improvements fast!
In the next Virtual Strategy Session, I will introduce you to another revolutionary new way of thinking about business that will change the way you operate!