Improving the Bottom Line through Cost Reductions

Often the business owner is kept up by cash flow worries. Whether it is meeting business obligations, purchasing more inventory\equipment, increasing marketing budget, and/or opening another store, to name a few. However, most small business is usually cash strapped, barely able to meet regular obligations such as, payroll, rent, and electricity. How then can you increase revenue in such an environment?

Before contemplating bank loans, credit cards, begging family and friends, Gofundme etc. there is an easier way, cost reductions.

Reducing expenses proportionately increases operating profit. You must have the will to cut. For we all have our biases that justify keeping an expense whether necessary or not.

The best way to do a cost analysis is to use an objective person: employee, family, good friend, to do a line item review of your expenses; questioning every one as follows: Is it necessary? is it the best price? how much value for the bang? can that function\department be combined with another etc.

Subsequent to the cost analysis, you should be able to determine how much additional revenue cost reductions will generate. Usually a substantial amount when done properly. The next step is to implement your cost reductions plan to start freeing operating cash to be used for meeting obligations, marketing, or expansion.

Doing cost analysis annually keeps you afloat and make your financials more appealing to the banks, prospective partners\buyers, investors. At Ljosr Consulting we provide that service to our CEO club members, please click on the link to join the club.

Should you need more capital than that generated through cost savings, you should look into SBA loans, local SBDC, private equity firms Call us at (347) 529-1410. for any questions. The call is free, the information is priceless.