A seemingly difficult question for many small businesses is: should you focus on growth or profitability? There is often only an answer in hindsight. Regardless of your answer, we suggest that twice a year you review your expenses and do some spring and fall cleaning.
Just like clothes in your closet, for any services you haven’t used, benefitted from, or implemented to near full capacity in the last 6 months you should cancel first and consider adding back later. Simple as that.
For line items that straddle the growth or profitability decision, the answer becomes a bit murkier. We suggest the following framework to help you with your decision making:
- If you are using a service/product that will benefit you more later (when you are theoretically bigger) but is not being used today, ditch it. Profitability wins the battle there.
- If you are using a service/product that is threatening to raise prices if you don’t renew, ditch it. Unless it offers a unique value proposition, then there are likely competitors that exist and will become more competitive by the time you need the service again.
- If you are testing a service/product. Keep it for a defined period of time.
This summer we went through this exercise and we can tell you that it was a serious breath of fresh air. Our costs went way down. And the fewer number of services we manage now, we do so more effectively (see our article about choosing what not to do).