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The Online Advisor - November 1998
Business Expenses: Go for the base hit
American managers have a tendency to look for killer solutions to controlling business costs, bypassing cost-effective, but smaller-scale alternatives. This is akin to the baseball team that relies on home runs rather than base hits to score.
Opportunities for controlling costs are often missed because individually they don’t account for much. However, over time, they can accumulate to significant savings. That’s the idea behind continuous improvement.
Try these suggestions -
- Take a look at who in your company makes spending decisions. In reality, that’s everyone from the janitor to the chief executive. For example, everyone on your staff spends the company’s money when they use office supplies. Or, who forgot to turn off the air conditioning and lights last night? Controlling costs should be everyone’s business, but it requires an attitude adjustment, along with a recognition that small amounts of waste have a surprisingly large cumulative effect.
- Company officers should recognize how their own habits have been passed on to others in the organization. If they are not conscious of the need to control costs, that is likely to be the attitude of others throughout the organization. Be sure each employee understands your expectations about controlling waste and reducing costs.
- Make a list of the costs you believe are too high.
- Develop and display a graph that tracks spending for the items on your list. The graph should project future expected reductions and be updated periodically to show progress towards the goal.
Make cost control an objective in your business, with a goal of incremental cost reduction every day. Go for base hits; it may be a long time between home runs.