It’s a given that you’ll want to maximise your business income. Sometimes, however, when factors outside your control are limiting your income, rethinking your costs might be where you can shift your outcomes in your favour.
Whether the market’s in an upward or downward cycle, good systems for tracking and controlling costs will help your bottom line.
Focus on your profitability. It’s great to blitz your production targets and it’s exciting when market prices are high. However, you need to look at them against what it costs your business to achieve those production targets and prices. High production costs can undercut both to eat away at profitability.
If you look at your costs as a percentage of gross income, you will have a much clearer picture of the impact of costs on your profit margin.
Good cashflow should have your continuing attention. During tough times, when you need to free up cashflow, cutting your costs might be the only wiggle room you have.