đź’ˇ Tip-of-the-Week
Vendor Call Blitz: Book two 15-minute calls this week asking suppliers for discounts or better terms.
In This Issue:
- Why trimming obvious expenses rarely fixes chronic cash strain
- The “NASA Budget” story and mindset shift
- How to match cost-cutting intensity to your financial health
- Five practical strategies to reach real, lasting profitability
- Tip-of-the-Week ideas to put theory into action
Why This Matters
Most owners begin an expense overhaul by going for the “low-hanging fruit”—cancelling duplicate software, dusty equipment leases, or forgotten subscriptions. We find that most businesses have between 5 and 15% of just waste—expenses that could be cut with no impact on revenue generation. Start by cutting those! That quick 5–15 percent cut feels good—until we find that operating costs still ride at too high of a percentage of revenue (your business expenses should be low enough to provide a healthy profit, pay the owner a good wage, and cover taxes).
After a few rounds of expense reviews you realize, “We’ve already cut the low-hanging fruit—what now?” It often feels impossible to see where else you can cut. This edition addresses the deeper layer of cost control and the mindset needed to uncover it.
The “NASA Budget” Lesson
Strict constraints spark creativity. Your business behaves the same way—expenses expand until you impose firm ceilings.
Mindset Reset: Redefining “Need”
Entrepreneurs in cash crunches often say, “I need that tool, that software, that employee (or fill in the blank) to run my business.” Ask instead: do you need it more than you need a viable company, a steady paycheck, and peace of mind? Every dollar must earn its keep. If it doesn’t create revenue or protect profit, it’s optional.
Pick Your Intensity: One Size Doesn’t Fit All
Before you dive into strategies for deep cuts or price moves, step back and ask, “How sturdy is my financial house right now?” Your answer guides how aggressively you apply the strategies that follow:
- Crisis Mode — Cash feels like sand slipping through your fingers; payroll is doubtful. You need bold, immediate cuts—pause projects and spending, sublet space, trim non-essential staff. Most importantly — STOP taking out any more debt!
- Survival Mode — Bills get paid but every month is tight. Use a scalpel, not a chainsaw: renegotiate contracts, replace expensive tools with leaner options, raise prices on high-value offerings.
- Improvement Mode — Profitable but below target margins. Focus on small inefficiencies, streamline processes, and double down on high-margin revenue plays.
The weaker your cash position, the stronger the medicine. Align action intensity with urgency so you neither under- nor over-react on the road to lasting profit.
Five Practical Strategies Beyond the Easy Cuts
1. Cut It All—Add Back Slowly
Run a thought experiment: you have zero discretionary budget for 30 days. Add back tools only when their absence blocks revenue. Most firms discover 10–20 percent of costs never return.
2. Cull Low- or Negative-Margin Products
Audit every offering. If it can’t clear your target gross margin, either reprice, bundle, or retire it. Resources freed here fund profitable lines.
3. Pair Aggressive Cuts with High-Margin Revenue Plays
- Upsell existing customers with premium add-ons they already trust you to deliver.
- Incremental price bumps (3–5 percent) on core services often go unnoticed by loyal buyers.
- Strategic alliances: cross-promote with complementary businesses to tap warm audiences at near-zero cost.
4. Systemize to Lower Labor Cost per Unit
Document one repeatable task each week; automate with no-code tools or delegate to lower-cost talent. When labor hours per sale drop, every future sale becomes more profitable.
5. If All Else Fails, Pivot the Model
After radical cuts and margin fixes, if you still can’t fund profit, tax, and a reasonable owner salary, the underlying model is broken. That may mean serving a narrower niche, charging value-based pricing, or launching a new revenue stream with healthier economics.
The Bottom Line
Lasting profitability emerges when you challenge every “need,” match tactics to financial reality, and innovate under constraints—like that hypothetical NASA team. Impose firm limits, rethink assumptions, and watch your business start funding your life instead of draining it.
