General Business Practices (3 of 3): Controlling Expenditures / Cutting Costs - John M. Leask II CPA/ABV, CVA

General Business Practices

Part 3 of a 3 part series


  • Falling profits (before owner’s compensation).
  • Rising expenses.
    • Cost of goods sold.
    • Operating expenses.
  • Decreased gross margin
  • Significant adverse deviations from budget.
  • Significant increase in a particular line item’s cost.


  • Open the bank statement and skim transactions, or control by budget exception.
  • Limit expense authorization to upper management.
  • Limit check signing to a person who controls cost, but does not do bank reconciliations.
  • Secure current bids for all major expenditures (and update).
  • Value management cutting costs, increasing value, getting more competitive.
  • Profit is a state of mind.
  • Monitor departmental budgets.
  • When cutting costs, pay more attention to repeat costs than one-time costs.
  • Make everyone responsible for cutting costs/increasing productivity.
  • Form an internal cost-cutting committee to trim waste.
  • Eliminate unproductive meetings.
  • Don’t be afraid to downsize in hard times or when sales shrink.
  • Scale back retirement plan contributions.
  • Guard against losses from employee theft.

Steps to Improve: OTHER

  • Keep your assets liquid.
  • Shield your personal assets from creditors.
  • Checklist – Perform an operations audit to improve operations.

Back to The Business Doctor

>>General Business Practices (1 of 3): Providing Business Leadership
>>General Business Practices (2 of 3): Monitoring Your Business / Key Statistics
>>General Business Practices (3 of 3): Controlling Expenditures / Cutting Costs