Thoughts About Cutting Costs and Increasing Margins
This morning my partner Nick sent me over an e-mail letting me know we were going to be able to save $638 dollars on our yearly insurance premium for the coverage. I don't talk much about the cutting costs side of business because typically Nick handles that side of the business.
Pat = Incomings
Nick = Outgoings
But this is one of the real neglected areas in our industry. We all like to talk about making $75 or $100 dollars an hour - but what do we actually net? That's a crucial question because net is a helluva lot more important than gross. So here are a few points to think about when your trying to cut costs and increase margings:
1. Get your bills checked. Take nothing for granted. We just received a refund from a company that had been overcharging us $25 per month.
2. Test everything. If you are sending a mail piece, test it in small #'s first.
3. Before every business purchase say to yourself: 'Do I really need this?' 'Do I need it now?'
4. Negotiate everything. I ordered a direct mail piece recently and the starting price was $0.41 per piece - we ended out paying $0.32.
5. Lower dollars tied up in inventory if you carry retail.
6. Know what you're willing to spend before any transaction. Walk away if you can't get your terms.
7. Think of every cost as a percentage of sales. Know what it costs to run your business each week / month. Know how many sales it will take to cover expenses.
8. If you have employees - commission compensation is best.
9. Get a better accountant.
10. Stop doing low return activities. Here are 2 steps:
Step 1 - Track EVERY hour you spend working on your business for a week. Not just time spent with clients. Time spent marketing, paying bills, writing programs, etc. Now divide your week's income by that number of hours. This is your true hourly rate.
Humbling huh?
Step 2 - Put a sign on your wall with your desired hourly rate. Every time you start a task, are talking on the phone or surfing the net - look at the sign. Is what you're doing paying you that rate? If not, outsource it or eliminate it.
11. Raise your prices - the easiest way to increase margins.
12. Set monthly expenditure budgets. Now try to get more each month for that amount.
Just something for you to consider. We go into more detail on that and every other part of running a successful fitness business on the new product. You can check it out at:
http://www.fitnessbusinessrevolution.com
Later.
Pat = Incomings
Nick = Outgoings
But this is one of the real neglected areas in our industry. We all like to talk about making $75 or $100 dollars an hour - but what do we actually net? That's a crucial question because net is a helluva lot more important than gross. So here are a few points to think about when your trying to cut costs and increase margings:
1. Get your bills checked. Take nothing for granted. We just received a refund from a company that had been overcharging us $25 per month.
2. Test everything. If you are sending a mail piece, test it in small #'s first.
3. Before every business purchase say to yourself: 'Do I really need this?' 'Do I need it now?'
4. Negotiate everything. I ordered a direct mail piece recently and the starting price was $0.41 per piece - we ended out paying $0.32.
5. Lower dollars tied up in inventory if you carry retail.
6. Know what you're willing to spend before any transaction. Walk away if you can't get your terms.
7. Think of every cost as a percentage of sales. Know what it costs to run your business each week / month. Know how many sales it will take to cover expenses.
8. If you have employees - commission compensation is best.
9. Get a better accountant.
10. Stop doing low return activities. Here are 2 steps:
Step 1 - Track EVERY hour you spend working on your business for a week. Not just time spent with clients. Time spent marketing, paying bills, writing programs, etc. Now divide your week's income by that number of hours. This is your true hourly rate.
Humbling huh?
Step 2 - Put a sign on your wall with your desired hourly rate. Every time you start a task, are talking on the phone or surfing the net - look at the sign. Is what you're doing paying you that rate? If not, outsource it or eliminate it.
11. Raise your prices - the easiest way to increase margins.
12. Set monthly expenditure budgets. Now try to get more each month for that amount.
Just something for you to consider. We go into more detail on that and every other part of running a successful fitness business on the new product. You can check it out at:
http://www.fitnessbusinessrevolution.com
Later.
posted by Pat Rigsby at 5:54 AM
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