Are you running an expense analysis each month or quarter in your business? If not:
What: The goal of the expense analysis is to differentiate between costs & investments in daily/regular spending. This is typically the first step when implementing Profit First, as most businesses can cut between 10%-25% of expenses without jeopardizing the quality of service or product allowing the business to ensure they are using the revenue to its highest potential.
Who: Most business owners think they are running lean and there’s no waste. An expense analysis is beneficial even to these businesses, as it either confirms this to be true or sheds light in areas where this is not the case. EVERY BUSINESS MUST RUN AN EXPENSE ANALYSIS QUARTERLY.
Why: It is imperative for each business to do its due diligence to ensure the health of the business. An expense analysis allows the business owner to understand where they are spending, and it drives them to ask better questions surrounding their daily investments to ensure they continuously generate a return.
How: Because an expense analysis is just as emotional as anything else in a business’s finances, we take a different approach to avoid an extreme case of loss aversion, which often leads to unwarranted justification. We accomplish this by reverse engineering into the expense goal for the quarter