According to Benjamin Franklin, “a penny saved is a penny earned.” In other words, it’s just as beneficial to save money as it is to earn it. But anyone familiar with cost reduction knows that Franklin was wrong. In fact, a penny saved is significantly more valuable than a penny earned!
One of the primary reasons for this is that “a penny earned” applies to the top line of a company’s revenue. Top line growth is all about the gross sales, the total money that comes in before paying overhead and expenses. But how much of that money does a business keep after accounting for their expenses?
On the other hand, when “a penny saved” applies to the bottom line, the company’s net income and profitability increase. Since the company’s net income includes all business-related expenses, you can see how “a penny saved” on the bottom line is worth more than “a penny earned” on the top line.
Increasing profitability is the value of cost reduction. And you might be surprised how many opportunities there are for your business to increase the bottom line by reducing expenses.
The global COVID-19 pandemic exposed how vulnerable all small businesses are to sudden change. While many companies thrived, many of our favorite local establishments closed their doors for good. All small business owners experienced anxiety during these uncertain times, especially early in the pandemic.
More than any other time, saving money on your bottom line is imperative. By reducing your business expenses, you provide yourself with the flexibility to adapt to sudden changes. You also give yourself more of a safety net to try new things – something that small businesses have had to do to adapt quickly.
Increasing revenue is difficult at the best of times, but it’s even more so when economic conditions are chaotic. Reducing expenses is a way to maintain financial stability when increasing revenue is especially difficult.
It’s easy to take your operational costs for granted. Business service expenses are often seen as a necessary, if unfortunate, drain on your overall profits. But there’s usually room for negotiations on your business expenses, and there are professionals who can help you navigate them.
Most people do not realize that many expense categories, such as telecom services, are open for negotiation. You don’t need to take your initial quote as the bottom line. Is there room to reduce the fees you pay when your customers swipe their credit cards through your terminals? Could you be paying for features that are redundant or ones you don’t use at all? How about your shipping expenses?
Reducing your business expenses can be intimidating and very time-consuming. However, the potential impact that these reductions can have on your bottom line and, by extension, the stability and growth of your business, is significant. Properly optimized business expenses could mean the difference between letting employees go versus keeping them employed – not to mention being prepared for future bumps in the road.
If you are interested in speaking to a professional Cost Reduction Consultant on how you can save on your business expenses, do not hesitate to reach out to Shelby Mauldin at 210-202-1070 or by email at
shelby.mauldin@schooleymitchell.com.
Schooley Mitchell is the largest independent cost reduction consulting firm in North America. On average, we reduce essential business service expenses by 27-28% and have delivered over $360 million in documented savings for our clients to date. The best part is that Schooley Mitchell’s services are risk-free; any fees are contingent on finding savings.
