Rules for optimizing expenses to increase business profitability
Posted: Mon Jan 20, 2025 4:03 am
Most often, a company thinks about cutting costs only when things are going really badly, this is a completely wrong tactic. You should always strive to minimize costs, in this case you can count on high efficiency and increased business income.
Optimization based on the individual approach
You should not reduce expenses on individual or all items at once by the same average percentage. This is a formal approach that does not take into account the importance and priority of certain expenses. Another mistake is untimely payment of planned expenses (or ignoring these expenses altogether). Yes, you have money in your accounts, but the day will definitely come when you will have to pay off all these items, and a penalty or fine will be added.
Optimizing expenses is the benefit of using our student database a rather complex process, and it is not so easy to identify points where you can save. Take into account the specifics of the enterprise. What is vital for some companies may be of little importance for others. Therefore, in order to increase business income, you cannot approach cost optimization formally, and you should not rely on the experience of companies outside your field of activity.
Assessing the level of business income
Application of the priority principle
The principle of priority demonstrates the greatest efficiency in the matter of reducing expenses. This is when all of them are formed and grouped based on the degree of importance for the functioning of the enterprise. And here, of course, it is necessary to act "from the bottom up", that is, first exclude unnecessary expenses. Theoretically, this is understandable, but in practice it is not so easy to determine which expenses are considered unnecessary, and how their reduction will affect the overall work process.
The degree of possible impact in the short and long term can be analyzed by developing expected development options (both successful and unsuccessful), taking into account certain risks. For example, if you reduce raw material costs and buy lower-quality materials for the production of goods, then the costs for this item will decrease. But then there is a risk of reducing the characteristics of the finished product, which will lead to a drop in sales volumes. Revenue and profit indicators will fall, and they characterize the efficiency of the company.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
The Secret ROI Formula: Instant Advertising Efficiency Calculator
Anti-crisis Solutions Matrix: Find the Perfect Strategy for Your Business in 15 Minutes
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
1
Optimization based on the individual approach
You should not reduce expenses on individual or all items at once by the same average percentage. This is a formal approach that does not take into account the importance and priority of certain expenses. Another mistake is untimely payment of planned expenses (or ignoring these expenses altogether). Yes, you have money in your accounts, but the day will definitely come when you will have to pay off all these items, and a penalty or fine will be added.
Optimizing expenses is the benefit of using our student database a rather complex process, and it is not so easy to identify points where you can save. Take into account the specifics of the enterprise. What is vital for some companies may be of little importance for others. Therefore, in order to increase business income, you cannot approach cost optimization formally, and you should not rely on the experience of companies outside your field of activity.
Assessing the level of business income
Application of the priority principle
The principle of priority demonstrates the greatest efficiency in the matter of reducing expenses. This is when all of them are formed and grouped based on the degree of importance for the functioning of the enterprise. And here, of course, it is necessary to act "from the bottom up", that is, first exclude unnecessary expenses. Theoretically, this is understandable, but in practice it is not so easy to determine which expenses are considered unnecessary, and how their reduction will affect the overall work process.
The degree of possible impact in the short and long term can be analyzed by developing expected development options (both successful and unsuccessful), taking into account certain risks. For example, if you reduce raw material costs and buy lower-quality materials for the production of goods, then the costs for this item will decrease. But then there is a risk of reducing the characteristics of the finished product, which will lead to a drop in sales volumes. Revenue and profit indicators will fall, and they characterize the efficiency of the company.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
The Secret ROI Formula: Instant Advertising Efficiency Calculator
Anti-crisis Solutions Matrix: Find the Perfect Strategy for Your Business in 15 Minutes
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
1