Sunday, October 7, 2007

Focusing on What Matters

A company can slowly but surely start to build-up excessive overall company costs and overheads without realizing it.

When looking at P&L, consider the following:
1) revenue growth.
2) ratio between investments in marketing/R&D or customer-focused activities versus overhead costs.

There's no exact rule what that ratio should be, but it is safe to say that the lower the ratio, the more likely your company will get into trouble and stagnate or even loose market share.

Reduce company costs as much as you can, and invest the savings into opportunities that will directly generate revenue growth or increased customer satisfaction. Eventually, your bottom line will improve quickly.

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