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Cost
Analysis
There
are three types of costs in business:
*
Investments
* Ongoing Costs
* Sunk Costs
Most
businesses are very deliberate and careful about spending
money on new investments. These costs are "scary"
because they create a new commitment and carry new risk.
Ongoing
costs are often continued within the business because
change is difficult. Many business owners know they
should make investments to improve the effectiveness
of the ongoing costs, but instead they continue the
ongoing costs because it is the easy thing to do and
the decision will not be scrutinized.
Sunk
costs are an excuse and act as smoke screens that can
prevent good decisions from being made. How many products,
departments, projects etc. do you continue paying for
because you already invested in them? If you approached
those costs as investments today, in many cases you
would not spend the money based on the knowledge that
you now have. Usually these costs are barriers to success.
Any
cost analysis should be done by looking at every cost
as an investment. New risk is usually not more costly
than old risk! Former President Jimmy Carter tried to
institute a concept of Zero Based Budgeting. The model
called for each department budgeting like all needs
for cash were new needs. He had the right idea but it
was buried by politics.
When
business owners are budgeting for a new year, they should
not take any of the costs for granted. Analyzing and
prioritizing the financial demands, whether they are
new or have been around for a long while, can reveal
a new balance. Looking at decisions from a cash perspective
will help bring results that count!
A
Case in Winning@Business™
Just
a few days into learning the W@B process, crisis management
took over a business client who ignored the measurements
in progress and hired another person to increase capacity.
This seemed like a logical reaction to the problem of
an increase in the amount of work demands in the company.
It could very well be a solution. However, by handling
the situation in such a manner, the problem was bandaged
and the underlying causes would not have been revealed
if W@B were not being facilitated there.
In
this case, jumping to hiring another person may have
ended the crisis but it did not solve the problem. Other
solutions that evaluated work flow, outsourcing, software
and process upgrades, variable hours and many other
creative moves were studied and appropriate action was
taken. W@B differentiates between crisis management
and solving problems which is much more effective and
efficient for your business.
Information
Bombardment
In
our world today we are bombarded by information from
hundreds of television channels, the radio, the internet,
newspapers, magazines and even word of mouth. So much
of that information is slanted, biased or just plain
wrong.
It's
especially important in business to have input that
is true and reliable. Management One® works hard
to develop the facts and processes that lead to the
right conclusions. Winning@-Business™ focuses
on dispelling prevalent myths, getting the right information,
analyzing it properly, drawing the correct conclusions
and then following up accordingly. Winning@Retail™
provides the retailer with customized information generated
by state-of-the-art software, expert M1 analysts and
proficient M1 coaches. Having the edge on viable information
has always been -- but has become even more -- a vital
component of the success of a business.
Get
the facts! Ask the right questions and devise a way
to get to the truth. Sift through the information bombardment.
Gleaning the facts will drive not only your business
but also your life onto the right paths toward achieving
your goals.
Quote
of the Day
"Excellence
is not an act but a habit." -- Aristotle
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