Profit = Revenue – Costs

By Shai / On / In #WhyShaiWhy [Videos], Business, Management

I get to live a life where I meet tech founders all the time (it’s pretty sweet). But why do they have such an unhealthy obsession with Revenue?

Yes, here we are again at Accounting 101. It might not be the most exciting part of founding a cool tech business, but a solid grasp of financial principles at least means they’ll still have a business.

Obsessed with revenue

Well maybe we’re not “obsessed” but admittedly, 80% of our time tends to go to revenue-generating activities.

All the cool activities that happen in an organization have got to do with revenue-generation, like marketing and advertising, branding and product development. These are the sexy things.

And the boring ones?

Costs. They’re called costs.

When we’re wrapped up in revenue-generating, it’s easy to forget the other activities that should take up at least 50% of our time. I’m talking about cost-reduction strategies.

But if you want these things to be fun, remember that costs can be itemized and fixed; they can be reduced; they can be efficient. 

I guess we’re all on the same page on how to do this: You take big costs, slice them into small costs then create problem definitions out of those little costs, and that’s where you find the solution, right?  Sounds pretty simple, but I think we can agree that it actually isn’t.

In the video below, I share my experience with one of our clients that became a very good example of coming up with cost-reduction strategies. The problem definition of the costs that this client was carrying was HUGE. But I found one sliver of cost within four minutes of sitting in the waiting room, and it led to a big win.

The solution made a small impact on cost-reduction. After all, this cost I’m talking about was tiny! But the big win for me was the huge cultural change it brought, and I’ll tell you all about it below.

One small step for technology, one huge step for the people in this organization.

 

 

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