What you can cut and what you must never cut! Dynamic vs. Static Overhead

When you agree to follow the Profit First system in your business, you decide right then and there to let the business struggle so that you don’t have to. The next step is to make a plan for how your business will no longer struggle, but survive and thrive!

How does your business survive? There are two ways. One way is to cut the waste in your business (and make sure you’re cutting the right waste). Watch our Law Firm Director Liz Stevens address this strategy and one other in our Profit First Friday! Video “Dynamic vs. Static Overhead.” 

Video Takeaways

  • 2 ways your business will no longer struggle, but survive and thrive! 
  • Parkinson’s Law says that any resource the business has access to, either intentionally or unintentionally, will be consumed by the business. Cut waste to limit resources and force the business to live within its means. 
  • Never cut Dynamic Overhead because it is the overhead that makes your business money. If you do, you circle the drain and your business fails. 

Take Action. Look at your routine expenses from last month. What expenses are static overhead? What expenses are dynamic overhead? Find one expense that you don’t absolutely need, (or that you can find a creative solution to) and cut it from your business expenses. You have now freed up this money for: marketing, Dynamic Overhead, owner pay, or Profit!  (You get to choose.) This practice helps business owners not fear the slow decline in Operating Expenses as they increase profits.

Next Week! As you cut waste, you will see more opportunities for your business to grow! Next week we will discuss the concept of “Growing Broke” and how to look at your business’s  behavior to see if it is in danger of “Growing Broke” in:

Don’t Grow Broke! Why So Many Business Owners Don’t See the Rewards from their Business