It is natural to think about the expenses that are necessary and to focus on covering them. But a better plan is a focus on values. (Finally, cost is selected.)
April 14, 2021
4 minutes of reading
Comments expressed by Businessmen the contributors are their own.
One of the biggest burdens for businessmen Was cost. After all, if cost isn’t promptly offset by revenue, that’s the end of business. As the business grows, so does the cost. That’s why so many starting a business fail when they succeed – they grow faster on their own and cannot keep a positive cash flow.
The postmaster’s plan is a great example of how Not to think about costs in your business. Certainly, one should never accept unnecessary or too high cost and the cost must always be controlled. But cost-focused entrepreneurs are in real trouble. Costs are not bad – they are meant to end. Costs should always be reasonable because in the end, they are selected.
Cost is an option
It doesn’t seem that way, but every one Price The burden on a business is one choice. The reason you have costs is that you have decided to offer a product or service – and you conclude that it requires assuming those costs. The super powers of business people is to create new conditions value. Cost is necessary to create value, meaning the creation of value in line with cost.
In other words, cost is chosen indirectly by deciding what you want to produce. And they are picked directly when considering the alternatives you have when combining production. Buy property or rent a house? Hiring or employing an HR company or outsourcing functions? Costs are never fixed or required. They are choices.
This means that the cost of any business is only one means to an end. They have been or have been proven by their valuable contributions. Think about it. It means costs that are considered effective may no longer be available. And then they should be cut. Why keep paying for vehicles without contributing to the end?
Here’s the problem mature organizations incur: They have a lot of old costs that are no longer reasonable from a value perspective. The value created has changed, but the cost of those years remains. These costs are not reviewed as they have become a natural part of the business. This is true for most businesses.
At the end of the day, what entrepreneurs do is deliver value to their customers. But it is that value that makes customers pay the right price. The entrepreneur’s main problem is to provide value beyond what other businesses offer, and to produce it at a low enough cost to be able to charge an attractive price. So value must be all and ultimate for any business. Cost is assumed to be just to create that value.
When you start a new business, the value to the consumer is mostly unknown – to both the entrepreneur and the customer. This value can only be imagined by the businessman who produced it. If you succeed, it is your greatest asset.
Costs are different. They are initially assumed for their value contribution and chosen based on their price. Those who do not justify costs from a value standpoint are, in a sense, “bad” businessman. This includes mature organizations that incur unreasonable costs of inheritance. And they endure businesslessness because they don’t re-examine the cost structure.
The postmaster general handles deficits in USPS as a government official rather than an entrepreneur. Plan to cut costs by curbing valuable output, which is completely upside down. If USPS was a conventional business, the solution would be clear: First, ensure value is created; second, review all the costs from their value contribution perspective.
Lessons for entrepreneurs: Don’t run your business like a postal service.