The article provides an overview of how expense reduction is equally important as sales growth in profit generation.
When business owners or financial managers think about increasing profits in their firm we think the first thing that comes to mind is selling more, or increasing revenue. We can also turn that thought upside down and increase is profits without any additional sales – How? Expense reduction.
We know that sales are necessary for business survival, and that profits are even more necessary. It is the expense column of an income statement that turns those sales into losses, not profit!
Business owners could do very well to focus as much sometimes on expense reduction. As an example a thousand dollars in sales might increase profits by 100$ but a 100$ decrease in costs is the same as 100$ increase in sales! So management should focus on putting effort into that very leverage statement we have just made. Continue reading ‘Increasing Profits Without Sales!’ »