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By Sandy Chockla, Owner, Expense Reduction Analysts
When working to improve profitability, many businesses focus on increasing sales, but it is important to realize that reducing expenses also has a direct effect on net profit. This example shows that a $4K reduction in expenses can have the same impact to Net Profit as a $40K increase in revenue.
One needs to realize that suppliers are trying to win as much business as they can, at the highest margin that they can, just like any business does. Unfortunately, suppliers can take advantage of your misconceptions and business challenges in order to charge higher prices. For example, many businesses assume that loyalty to a supplier results in the best pricing and service, or they believe that suppliers give similar pricing to similar clients and customers.
Because many businesses struggle with limited resources, it can be impractical to dedicate equal resources to less strategic cost strategies. Therefore, you may not know what savings is possible in those categories. If you want to reduce expenses, you should follow the procurement best practices which will be shared in this blog post.
Sandy Chockla is a franchise owner and Principal Consultant for Expense Reduction Analysts (ERA). ERA has a network of experts in more than 40 overhead expense categories which I leverage to benchmark prices, review supplier agreements, and optimize our client’s purchases or services. This is done without compromising supplier quality or service. If you would like to have a discussion, you can contact Sandy at firstname.lastname@example.org or call direct at 970-232-4860