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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Listen to the Intro
Cut Costs Not Corners summary
Colin Barrow
A practical guide to staying competitive and improving profits
15 mins
Table of Contents
Cut Costs Not Corners
summarized in 6 key ideas
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Key idea 1 of 6
The key to a profitable business is cutting costs, maintaining quality and maximizing profit.
What’s the best way to make maximum profits? The simplest answer is to boost revenue, which of course helps if you can make it happen. But there’s a better and more easily controlled method that’s all about managing expenses. It’s called costs leadership, and here’s how it works:
For starters, you’ll need to focus on the two main types of costs: fixed and variable.
Fixed costs are independent of the level of a company’s production, and include computers, desks, telephones and other equipment. But the term can also refer to less tangible costs, like rent or insurance. In fact, labor is often considered a fixed cost since it takes time and money to hire employees.
Variable costs are dependent on the level of production, meaning that the more you consume, the more you pay. Examples of variable costs are raw materials, packaging and storage.
Now that you know the two main types of costs, you can start learning why intelligently managing them will produce lower-cost products, and therefore higher revenues, all while maintaining the same standards of quality.
You could reduce costs by making sweeping cuts, but this will likely lower the quality of the goods or services you provide. For example, if you decide to save money by cutting your customer support team, you’re likely to be facing some very unhappy customers in the near future.
However, wisely cutting needless costs will both increase revenue and maintain quality. For instance, IKEA’s founder Ingvar Kamprad built his 235-store empire through simple cost-cutting mechanisms that left quality intact. One strategy was to sell unassembled furniture, which takes up less space and requires less time to manufacture.
But how can you intelligently cut costs? Let’s look deeper at some specific strategies to reduce expenses while maintaining quality.
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What is Cut Costs Not Corners about?
Cut Costs Not Corners (2010) is a guide to managing and minimizing the costs of any business while maintaining the quality of its products and services. These blinks are full of actionable examples that will teach you how to trim the fat from your budget while keeping your customers and employees happy.
Best quote from Cut Costs Not Corners
Experience is also a big cost saver: repetition makes people familiar with tasks and consequently faster.
—Colin Barrow
Who should read Cut Costs Not Corners?
- Any business owner who wants more control over company costs
- Every CEO hoping to maximize his or her profits
- Anyone thinking about creating a start-up of their own
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