Probably doesn't seem that way to most business owners.
After all these years of applying IT to business, there is still a long way to go.
And don't forget the incredible effect of margin multipliers. If I'm running at 10%, then I could increase my profitability 2 ways, either by increasing revenue by $10 or decreasing costs by $1.
Say I sell $100 worth of stuff and earn $10. If I want to earn $11, I could either increase my revenue $10 and sell $110 worth of stuff. Or decrease my cost by $1 and earn $11. Without spending anything to increase revenue (people, marketing, fixed expenses, etc.)
The formula: IncrementalRevenueIncreaseNeeded * margin = IncrementalCostDecreaseNeeded. Pretty powerful stuff.
In many cases, it's still much easier to decrease cost than increase revenue. As one wise man once said, "It's all gravy (profit)."
"In many cases, it's still much easier to decrease cost than increase revenue."
It's also a more reliable sales focus, especially in an uncertain economy, to attack a cost stream that is real. Future revenues are a possibility, costs, especially recurring costs, are a tangible reality.
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"However costs are finite."
Probably doesn't seem that way to most business owners.
After all these years of applying IT to business, there is still a long way to go.
And don't forget the incredible effect of margin multipliers. If I'm running at 10%, then I could increase my profitability 2 ways, either by increasing revenue by $10 or decreasing costs by $1.
Say I sell $100 worth of stuff and earn $10. If I want to earn $11, I could either increase my revenue $10 and sell $110 worth of stuff. Or decrease my cost by $1 and earn $11. Without spending anything to increase revenue (people, marketing, fixed expenses, etc.)
The formula: IncrementalRevenueIncreaseNeeded * margin = IncrementalCostDecreaseNeeded. Pretty powerful stuff.
In many cases, it's still much easier to decrease cost than increase revenue. As one wise man once said, "It's all gravy (profit)."
"In many cases, it's still much easier to decrease cost than increase revenue."
It's also a more reliable sales focus, especially in an uncertain economy, to attack a cost stream that is real. Future revenues are a possibility, costs, especially recurring costs, are a tangible reality.