Are there unnecessary costs and significant profit leaks within your business spending?

Now that revenues are increasing and many businesses are on more solid financial footing, are we taking our eye off of expense management? Curious what your thoughts are since it seems that the pendulum has swung from revenue growth in 2008 as a top priority to a "lean and mean" focus (from 2009 to 2013) where expense reduction and increased productivity were the daily mantra and now back to revenue growth as the everyday drum beat - during the last 16 months or so. Isn't it possible to have a balanced approach where both objectives co-exist?

Answers

Regis Quirin Director of Finance • April 20, 2014

The focus should never be on revenues. The focus should always be on profits. Maximizing profits requires costs controls. Focusing on revenues only may lead you to incorrect conclusions. It is not uncommon that the high volume business which registers large revenues is not the most profitable business.

Wayne Spivak President & CFO • April 21, 2014

Balance of cost controls should be the watchword. In our recession, too many costs were squeezed just a little to tightly. So, with increasing revenues, a easement of some of those controls might be in order.

But not, as Regis said, taking your eye off the ball.

Patricia Oudille Credit, cash & treasurer manager • April 23, 2014

Sorry, I'm french (and probably my company did'nt spend enough on English training ;-) . I agree, the 'balanced approach' is not common practice, all the contrary. Very often, when profits are back, costs controls often falls by the wayside, which is a great mistake. Acting proactively and in an sustainable manner, especially when profit is back, should be the 'watchword' as mentioned by Wayne. By doing that way, pressing drastic decisions, up to and including dismissals, due to the high urgency that a sharp decline of costs requires, could be avoided. Don't you think that along with revenue and profit, a third business driver, such as cash flow, should be take into consideration to make this change ?

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Are there unnecessary costs and significant profit leaks within your business spending?

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