expenses

The Right Way To Cut Business Costs (Part 2)

As promised at the end of Part 1 of The Right Way to Cut Business Costs, I’m going to share here in Part 2 the rest of the 5 most common areas to look to cut expenses the right way.

The remaining three are:

3) Inventory is in overload and out of control. The vast majority of shops I visit when I first do my 1-to-1 consulting are way overloaded with dead inventory that is costing them money. To me, it costs money because they could be trading this excess inventory off for credits with a supplier or sold off at a discount to generate money. It’s easy to think, “I should have those items on my shelf because if I buy in bulk it’ll be a good deal,” or “I want a lot of it in my warehouse because I don’t want to run out.” It’s all flawed thinking.

The best thing to do is what I call “Exit the Warehouse” business process, and that means finding a great partner with a great vendor or even two great vendors if need be. They can help take control of what you keep in stock, and they can help you arrive at the correct minimums and maximums for each item. It requires restricting access to the warehouse itself to a very limited amount of…

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The Right Way To Cut Business Costs (Part 1)

Are all the expenses you’re “used to” carrying still pulling their weight?

Probably not!

Getting a better handle on this means you need to dedicate yourself to getting Financial Power in place.

Where should you start when it comes to cutting the right expenses in the right way?

Start by looking at all your expenses from the prior year listed in your Profit and Loss Statement (aka P&L). Take out a yellow legal pad if you want a manual moment or open up a Word document and list them all. Then, sort that list into must expenses and nice-to-have expenses.

It’ll be tough to do this because everything you now spend money on seemed like a good idea at the time. But a sinister thing about some expenses is they may be small expenses, but if they’re occurring every month, for instance, there is a compounding effect, and not in a good way. The reality is all these “small” recurring expenses add up.

Here are two of the five most common areas to look at when it comes to cutting expenses:

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