Have you ever heard the saying, "it's not how much you make but how much you keep?" If you increase your sales by 50%, but lose as much as you make because of waste and inefficiency, what have you truly gained?

Everything that we do in an organization, including sales has a cost attached. No matter your business or industry, companies are always trying find new ways to increase sales, find new customers, or grow their memberships. The combination of increasing competition and savvy customers means that companies must do a better job controlling costs if they want to improve their margins. The goal is to implement cost cutting measures that support your overall strategic position, deliver consistent short term results; produce sustainable long term efficiencies, and improve customer satisfaction.

COST #1 - The Cost of Unclear or Misaligned Goals

If goals are not clear people, work hardest at what they know how to do, not at the right things to do. 75 minutes of time spent working on the wrong activities or time lost performing rework cost a 500 person organization $3.1 million dollars per year (2004 Gallup Poll).

COST #2 - The Cost of Poor Problem Solving

Deferring problems or passing problems down the line, rather than finding and fixing them, accounts for a large part of organizational costs. Early problem recognition allows for the identification of more low cost options and allows the time needed to resolve them. The longer a problem is ignored the more people are affected and the higher the costs rise.

COST #3 - The Cost of Poor Decision Making

Poor decision making represents the highest cost to the organization. When a poor decision is made to chose a particular path or allocate resources in the wrong way, the costs include that allocation and the opportunity lost from not choosing a better alternative. Poor decision making has a ripple affect and unchecked affects more and more areas of the business. You get increasing cost along the way.

Costs, as a function of accounting represent the necessary expense of doing business. Whether it is labor, material, fixed, or variable, costs represent what is spent to keep the business running. Reducing costs has a direct impact on short term profit gains. The question is how do you make sure that you are getting the highest rate of return for dollars spent