Day 17 of 31 Days to Freedom in Your Business

Determine your own system for when you should drive revenue and when you should cut costs.

This takes some time and some trial and error, but the benefits of knowing this formula will last the lifetime of your business.

Driving revenue and cutting costs are often competing virtues, but both are levers to improve profitability.

There are likely to be times in the normal cycles of your business where revenues go down through no fault of your own (example: a toy store in September).  While you should always be trying to increase year over year, this might not be the most productive time to spend in an attempt to drive more revenue (your ROI will be very low).  This is a time to cut costs so that when you have times with higher potential revenue (that same toy store in December) you have the capital to invest in ways that will give you a very high ROI.

You won’t get this right every time, but once you get the hang of it you will start to see how many costs can be variable that you once thought were fixed (or close to fixed).

This is the ebb and flow of business.  

September might also be a good time for that toy store owner to take a nap.

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