How do you get More out of less? You may wonder how on earth you can possibly operate any leaner than you already are. You have just about implemented every possible cut to your budget and spending that is imaginable. You are positive that you have eliminated every nonessential expenditure from your business. It is to the point that it isn’t fun anymore; associates perceive you as being cheap.
It is common knowledge that in order to increase profitability, you have to do two things, increase income and decrease expenses. So if you have made all the necessary cuts, why aren’t your business margins getting better?
What is considered Non-Essential anyway? It is anything that is not necessary for your business to operate. AVS takes an ever more conservative approach, we suggest that you look at is as anything that does not return a greater rate than the tangible value spent. Value is necessarily defined as monetary. If you meet with 10 clients monthly, your total bill monthly, including tip and tax, comes to $700 monthly. You average winning one client monthly with a net income (after total expenses) of $1000 annually, you have profited $300.
By the way, depending on the caliber of your client, it might be reasonable to consider a change of restaurants, as well.
Have you become so frugal, you are spending time on tasks that should continue to be done by another professional? If you are performing a task that takes you more than 10-20 minutes, that is money that is cutting into your marketing potential and those things that generate income for you. Think of it like this, you have the potential to earn $250 an hour based on your profession. Yet, you would take that income earning time and invest it into typing an email database. Why would you cut into your earnings like that? You may think, “I only bill when I work, so if I have down time, why not get those things done?” Who knows your business better than you do? Instead, use your down time to market your business for future income potential.
You may think, it is only 20 minutes here or there, but it adds up. Calculate how many “20 minute tasks” you do in a month. I would venture to guess that you probably invest a minimum of ten hours, and probably more than that, on average a month, doing those tasks. That is ten additional hours you can spend networking, making calls, and reinvesting into your business earnings. That is a potential for another $1000-$2000 a month, after you pay your contractor. Isn’t that money better in your bank account?
Oh, and if you don’t have an accountant, my first questions is why not?
Larger companies and corporations usually have a Board of Directors to whom they are held accountable to. But smaller companies and solopreneurs are not always that fortunate. Yes, you read that correctly, that – fortunate. You may have loans you have to pay back to a bank, but do you have someone who reviews your fiscal practices?
Consider having a second set of eyes review your current and historical financial statements. Also, consider having another professional sit with you and review your profit center operations? The problem is, when we have done it the same way for 5 or more years, we are stuck. We get so comfortable with the way things have always been, there is no thought that it could be done differently. The other day, I talked with a prospect that had an assistant for 10 years. They had a very good working relationship. When his assistant resigned the owner thought that no one could possibly handle his office processes more efficiently. That was until Nancy walked through the door! Nancy was his new assistant. She was able to add new perspective to the way things could be done by automation and streamlining. It has been our experience that clients are under the impression they have done all they can do, but we have found there are other areas that can be adjusted.
Another thought is to reconsider the vendors you use. Maybe the services they offer do not align with your business goals anymore, or maybe the vendor contract can be rewritten or renegotiated. For example, telephone companies, Internet Providers and cell phone business are notorious changing service offers. If you are not locked in, why not have someone look into a more cost-efficient solution?
Are you focusing on services that do not offer sustainable income? Do you offer services that are short-lived? Do the short term services take you just as much set-up time as your long-term business offerings? Consider phasing out those short-term types of service offerings. A friend of mine works for a reputable arbitration business. This business is constantly pursuing foreclosure deals. The problem with these deals is they tend to never last the full length of the average service life-cycle of five years. These life-cycles would average less than two years. That is a problem for this business because they have to hire specialized talent and unique systems resources to handle these types of deals. The projects were not sustainable, and good resources were being wasted. The lesson this company learned was that not everything that generates income, really adds up to sustainable income. Focus on services that will generate income over longer periods of time. Also, focus on services that will segue into other project offerings.
We are all familiar with the expression, not all that glitters is gold. It is the same principle with every opportunity that comes our way. Gold lasts forever, it never tarnishes, and it rarely devalues. That is how you want to operate your business. Provide services that are repetitive, long-lasting, and business-generating.
Evaluate what expenses are going to grow your business, then cut expenses out, those expenses that do not contribute to your business growth. Next, renegotiate what is absolutely necessary.
Determine what processes can be done differently, outsource to contractors who can do the project for less without sacrificing the quality behind the business. Finally, take your new found time you just retrieved and invest it in networking and generating potential income for your business.
var _gaq = _gaq || ; _gaq.push(['_setAccount', 'UA-35667423-1']); _gaq.push(['_trackPageview']);