Programamipc Blog

pNow this is interesting because as soon as you start hiring a href=http://www.bestaccountswellington.co.nz/ target=_blankaccounting/a staff theynbsp;want to spend money on stuff and so something that I didnrsquo;t really looknbsp;at enough was keeping an eye on those costs. I mean, they all add up,nbsp;the hundreds of dollars for the water cooler or for the — you know,nbsp;for whatever it is the stationery overhead, that all adds up to thousands.nbsp;And then the thousands of dollars add up to the tens of thousands. And what I wasnrsquo;t doing is looking at every expense and going, ldquo;How does this actually contribute to profit?rdquo; and ldquo;How much does it contribute to profit?rdquo;Because it is so easy to just buy stuff, the ldquo;nice to havesrdquo;. And Iwasnrsquo;t doing things like looking at the industry norms, around revenue that you should be doing per head?Because at one stage I had in business 14 staff and we were doing the revenue that we were doing, and by the end I was down to five and we were doing the same amount of revenue, so what were the other people doing?Keep you eye on costs and think about how they actually contribute to profit.I was spending all my time trying to manage them. Staff is often the biggest cost and so really if it is down to employing — you are wanting to solve a business problem, you need to look at, okay, well how do I solve that business problem? Can I contract someone in or do I need to employee someone full time or is there some software that can manage that? So now Irsquo;m a lot harder on looking at what any investment Irsquo;m making, or any commitment, what does that do to my net profit and how much is that?Return on investment because when I sold my business, I looked back over four year sand I nearly threw up. Seriously, there were tears as I just looked at how much money had been wasted over the years. a href=http://www.bestaccountswellington.co.nz/ target=_blankAccountants/a have Millions of dollars coming in and millions of dollars going out and how I didnrsquo;t at least manage to capture at least another million dollars off that. Seriously, it almost took that for me to just open up my eyes and just go, ldquo;Holy cow, Irsquo;ve got to learn this lessonrdquo; because it has cost me millions of dollars, this one here.You do. There is a caveat, because you canrsquo;t be so tight that you put the handbrake on business growth. Because there is some investing that is required. If you make an investment that you get a return on then that is fine. But some people just get so tight that they actuallynbsp;stifle the growth of the business. For example marketing; some companies, well they do it but it is just wasteful or ineffective marketing. But done well or even low cost ways, when you know how to do it, you can multiply your results.Yoursquo;ve talked of examples where a $300 letter can generate $3,000 in sales – revenue straight off.You have got to be clear here, it is accurate an dwell done marketing, for example.Knowing whatrsquo;s working. And yes, so thatrsquo;s what I do with companies, I tweak their marketing that theyrsquo;re doing and make it work. But the most important thing in business, I believe, is to get the clients you want who pay the money you want.Focusing on making that happen and avoiding getting too internally focused on cost-cutting measures, someone needs to keep an eye on that always, absolutely. But as long as someone is growing the revenue thatrsquo;s where you make profit, because you cannot cut costs to prosperity. You canrsquo;t just focus on cost cutting. The biggest expense yoursquo;ve got is the money you lose from not making the sales,for the opportunity that you are sitting on. So do focus on revenue but manage your costs.br /Donrsquo;t build the big ship first, the big infrastructure and go, ldquo;Right, now Irsquo;ve got all this letrsquo;s get the business inrdquo;. Donrsquo;t do that. Itrsquo;s the other way around. You get the business in and then you build the ship as you go.The business needs to be profitable and then it will grow. Every item of business needs to profitable.There are some exceptions I canrsquo;t get my head around, like some technology companies they pile millions into — they lose, lose money and then they can sell for $5 million. I donrsquo;t get that, Irsquo;m not going to go there.Making money and managing costs – getting a return on your investment is the key./p