How are firms able to understand the future of their business when the present is so volatile? How do you forecast revenue and budget for costs?
Managing costs doesn’t just mean simply reducing them. How can you strike a balance between maintaining cash without crippling future revenue and potential growth?
1. Understand Revenue to Manage Your Costs
Firms have budgeted fixed expenses like staff and rent. They are re-evaluating how they support the business to adapt to a volatile market and remote work situations. What is the best way to leverage your staff? Can you reduce office space? Can less staff produce more? How?
2. Leverage Vendor Relationships
Your business will have expenses, but you can seek ways to manage them. Negotiate with your vendors ways they can help control or limit their fees. Minimize exposure to surprise expenses and financial stress.
3. Pass Through Where Possible
Whether it is just your staff effort or your records fees, determine what can be passed along to the client. Even if you do not pass all of it, the flexibility frees your business from some of those costs.
4. Trace Case Revenue to Original Marketing Spend
Some say, “If some is good, more is better.” For most marketers, this is probably true. These same marketers are missing the connection between the spend and what is generated in new business.
Expand your perspective beyond simply counting Intake Leads, and look to the quality, the resulting revenue, and how far out that revenue is likely to be. How well does your spend work in that market, on that media?
5. Re-Assess the Value of What You Have Always Done
It is human nature to establish a routine and comfort with the way you “do things”. This routine likely involves how you buy and what you buy. The coming months may be volatile and the better you know your costs, the better you can adapt.
The coming months may see dramatic fluctuations in revenue. Don’t expose your business to unnecessary risk when revenue is low. Manage your expenses, because when you run out of money, you lose.
