- Break costs down into two categories … needs and wants or necessities and luxuries. Ask what wants or luxuries can be eliminated and what needs or necessities can be reduced.
- Determine your fixed costs. A business’ fixed costs generally should be 20-30% of net revenue (gross revenue less cost of goods sold).
- Develop an operating budget
- Automate payments from clients
- Review cash flow weekly and have a process for cost management. This may include a cost management plan which will begin by aiming to determine the cost of each activity and a corresponding budget, establishing baselines, how the activity and budget will be managed, control thresholds (at what variance do we take action?) and methods for evaluating performance such as percentage of completion or value management.
