Business Solutions for Your Profitable Future
Expense
Expense is the piece that is most often attacked in a Cost Reduction Project (one-time) or Process (ongoing). Everyone is often told to cut back until it hurts and then cut some more. Cost reduction hits the national business news on an almost weekly basis as big name industries announce across-the-board cuts of 5, 10, or even 20%. People usually get the short end of the expense reduction stick and the implications are wide ranging and severe. Studies consistently show that across-the-board personnel cuts do not lead to long-term corporate success.
The Profit improvement Process (PIP) is effective because it focuses on loss and revenue in addition to expense. Everyone in the company is engaged in a positive approach toward building a stronger and more profitable company. People win with a PIP.
Examples of candidates for cutting in Cost Reduction include:
- Travel & entertainment expense
- Office expenses
- Office supplies
- Manufacturing supplies
- Wages & salaries
- Utilities
- Paper
- Copy machines
- Printer costs
- Insurance costs
- Rents
- Telephone & other communication expenses
- Automobiles
- Conventions and trade shows
- Memberships
- Maintenance costs
- Consulting
What PIP Does to Expenses:
The Profit Improvement Process (PIP) identifies, quantifies, and prioritizes the areas of excess expense that your business is experiencing. Priorities are addressed to increase profits. Key points about expense management include:
- Every dollar of expense that is removed reports directly to the bottom line.
- Training creates an awareness of what being a Cost-Effective Organization is and expenses drop even before specific projects are identified.
- Priorities are set and excess expenses are adjusted in order of that priority.
- Checks are made to ensure that nothing is cut too deep...resulting in higher costs.
- This is a positive approach to expense management.
- In some cases expenditures are increased because the case is made that there will be a return on that investment.
- Revenue growth is kept in the picture to keep the company vital and alive.
Achieving World-Class Profit Improvement: See the world-class profit improvement processes. A must-have resource for any cost reduction practitioners.
