Expense > Revenue = Failure

expense-vs-revenue

I know this may seem like a nobrainer, but unfortunately, its’ something I see all too often with colleagues and clients alike. One of the many things that companies fail to look at or even fully understand is the negative impact of having a greater expense than revenue. 

I have had the opportunity to review a number of businesses. Most of them have been on the downward spiral to failing because their expenses cost more than the bring in. This is not only a recipe for disaster but failure.
No business wants to fail. That’s why we take the time, energy and resources to develop detailed business plans and execute those plans for success. I’ve used the saying a number of times that failing to plan is planning to fail. Unfortunately, there is a number of businesses that even though they put those plans in place, execution is not a top priority and often times causes a deficiency in the revenue and expenses. 

It is important that a constant check is placed on the financial aspect of your business. Ensuring that you make more money than you spend. If you need to cut back, make adjustments to keep your revenue greater than your expenses. Yes, there will be times when your expenses will be more than revenue, but when the problem is constant and last for extended periods of time, before you are in too deep, you might want to make the necessary shifts to decrease expenses while increasing revenue. 

There are simple adjustments that you may not think about that can help. If you produce a product, look at new suppliers, negotiate cheaper pricing to decrease your expenses. If you are a service provider, look at alternatives to assist in the execution of services. Instead of laying people off, cut their hours or pay them less and allow them to work remotely. Increase your prices to adjust for the difference between revenue and expense. Even slightly increasing your prices, many people won’t notice the difference. 

It is important to ensure that your business plan is updated and accurate and will referenced as a blueprint to ensure that the expenses do not exceed the revenue. Feel free to use our revenue and expense tracker to check your current business status.