This post is Part 2 of “Where To Start?” because in our last post we just started to uncover the most important part of a business – being honest. If you aren't seeing the truth for the truth, you will never be able to make wise, correct decisions. Only deal with the truth and don’t sugar coat things to make you feel better, be brutally honest with yourself.
We have been discussing cutting costs in order to get your business profitable again and we are going to keep looking into this. You want to look at all of your costs, everything that causes cash to leave your business, your bank account, your pocket and have it go into someone else’s pocket. You want to look very closely at these and see what you absolutely must have and what you absolutely do not need to survive.
Most people in the world think in terms of cash flow but we think in terms of cash stop. When all the bills are paid, how much cash has stopped to stay in your bank account, your business, your pocket? Cash stop is far more important than cash flow – never forget this.
Never forget the 80/20 rule because it works in every area of your life and that includes your business. Let’s look at your sales people if you have them, 80% of your business will come from 20% of your efforts. If you have 10 sales people, two of them are out-producing the eight others by a wide margin.
Wouldn't it be better to divide up the other eight sales people’s accounts and give it to the two top producers? They are getting more accomplished in the same amount of time, your expenses drop dramatically and you can now take care of the two the way they should be taken care of.
This may seem like a radical approach but this is about surviving and thriving, not worrying about what others may think.
If you provide vehicles for your staff you may want to rethink this. It may be better for you to pay your staff a car allowance and have them drive their own cars. No one will take care of your vehicles like they will take care of their own. Also, if they use your vehicle during off hours and something goes wrong, it is on you.
What about rewarding your employees for finding ways to cut your costs? This may sound strange but why not pay your employees to cut costs for you? Why not pay them 10% of the savings they produce? The best people to find the costs they can cut out of their departments or area of work are the people that are in it every day.
We did this at a company I used to run and it was amazing how much waste we “all of a sudden” found. We had machines that were leased that we had been paying on for six years that no one was using! We found so much money that we were able to cut out over $50,000.00 per month in a very small business! We took 10% of this ($5,000.00), and gave to those that figured it out every month in their paychecks. Soon everyone was looking for ways to cut costs and came up with some really brilliant ideas.
Dig deep for cost cutting and you will find ways to become more profitable. In our next post we will start looking at increasing your income so stay tuned.
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