| "However costs are finite." Probably doesn't seem that way to most business owners. After all these years of applying IT to business, there is still a long way to go. And don't forget the incredible effect of margin multipliers. If I'm running at 10%, then I could increase my profitability 2 ways, either by increasing revenue by $10 or decreasing costs by $1. Say I sell $100 worth of stuff and earn $10. If I want to earn $11, I could either increase my revenue $10 and sell $110 worth of stuff. Or decrease my cost by $1 and earn $11. Without spending anything to increase revenue (people, marketing, fixed expenses, etc.) The formula: IncrementalRevenueIncreaseNeeded * margin = IncrementalCostDecreaseNeeded. Pretty powerful stuff. In many cases, it's still much easier to decrease cost than increase revenue. As one wise man once said, "It's all gravy (profit)." |
It's also a more reliable sales focus, especially in an uncertain economy, to attack a cost stream that is real. Future revenues are a possibility, costs, especially recurring costs, are a tangible reality.