Tuesday, September 4, 2012

5 percent or 30 percent?

Stuart McDaniels, Materials Manager

Which do you think is easier to do, reduce your costs by 5 percent or grow your sales by 30 percent?
Recently I was told by a respected colleague of mine, who just happens to be a C.P.A., that a 5 percent reduction in costs equated to a 30 percent increase in sales for the average business.  

Think of it this way: If your current profit margin is 5 percent and you reduce costs by 5 percent your profit doubles!

What would you have to do to increase your sales dollars by 30 percent? Hire more sales and support staff? Work more hours? Expand your market?

Now think about what you could do to lower your costs by 5 percent without sacrificing quality. You could implement a green/sustainability plan (energy efficiency, water efficiency, recycling, waste reduction, maintenance, etc.), pay invoices early in exchange for a discount, or manage your inventory to avoid purchasing what you don't need. I'm sure you will agree there are many more ways, and none of them are as daunting as thinking up new strategies to grow sales by 30 percent.

As a Trigard customer, we want you to succeed. We care about costs because we know you do. You benefit from our cost reduction efforts just as we do from our suppliers' efforts. When we work efficiently we all become stronger.

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