Control Spending

Control Spending!

Many complain about inability to control spending.

The obvious answer to control spending is to cut spending, you will say.

And maybe boost revenue.

Sure.

But how? Which spending? Which revenue?

What I advised someone last week:

1. The only first move you must make is this: “Track it”. Create some visual graphics (infographics) to show by week, month, or quarter, a specific list of expenditures and a specific list of revenues. Line graphs. Pie charts. Bar charts. KNOW what you spend each period, by category.
2. Then allocate spending into three categories: “A”, “B”, “C”. “A” is essential. “B” is a high priority but not essential. “C” is optional, discretionary. Don’t tell me that your spending is all “A”. It’s not.
3. Do the same for revenue. Most important is “A”. The highest yield is “A”. Highest margin revenue is “A”. “B” is a longer sales cycle. “B” is harder to raise. “B” is more challenging. “C” is the lowest yield. ”C” is the toughest to raise. The sales cycle is very long.
4. Then radically cut out “C” spending and “C” revenue. Focus your efforts on “B” and “A”.
5. Then shorten your sales cycle. We all waste too much time letting the sales cycle creep on and on. Close faster. Move people along faster. Drop failing prospects sooner. Move on quicker.
6. Figure out ways to practice yield revenue management. For every hour you spend, get the highest revenue possible. Priority “A” and “B”, maybe even “A” only, is the best way to produce higher revenue. This, in turn, helps you on expenses.
7. Improve your AR. Cut your credit terms. Get payment immediately, or insist on installment payments. Discount more to speed up cash flow. Do AP at the last possible promised moment.
8. With regard to expenses, cut more aggressively. Stall off spending one week, one month, six months. Examine items for contracting out options or spending 10% less.

Best of all, get tougher on expenses. When I was in charge of both $100,000 budgets and $100 million budgets, I could always find 7% to 12%. Anytime. Guaranteed. Show me your numbers and I’ll show you where.

God bless you and your family. You can be Catholic and successful in business. Believe it.

St. Joseph, pray for us.