Don’t let costs embed themselves in your business
This is a “physician – heal thyself” post!
Some time ago I ran a workshop for MDs about good financial management and one of the sessions looked at how costs get embedded in your business and stay there, like fossils, for years and years, eating up cash, when they don’t need to be there at all!
Fossilised costs, we call them.
They exist everywhere and sometimes you need to go on a fossil hunt and clear them out!
We had a fossil hunt several years ago when we had to move offices. Our landlord gave us a 100% rent increase and we decided to move out.
At which point we looked at what we needed in the new office, compared it with what we had and what it cost and thought “how did we let these costs build up without challenging them?”
In any business it’s worth standing back from time to time and asking whether you need everything you are buying and whether you are buying at the right price.
Look at everything from people to premises, phones, stationery, storage and anything else you spend money on.
Also, look at your processes and see if you can’t change the way you do things and be more efficient.
One outcome of our office move is that we decided to go “paper-free”. This saved a huge amount of time and money each year because we didn’t have to archive paper files and it led very quickly to putting our entire business into the cloud.
Costs and processes become habitual, “we do it this way because we have always done it this way”, and you take them for granted.
An expensive mistake.
But you can fix it – all it takes is a fossil hunt!
Sales | Margins | Profit | Cashflow
Fossilised processes pops up in our Profitability, Productivity and Pricing workshop – why don’t you join us at the next one?