3A CashFlow Positive Business of Your Own Must Do #3

A Cash-Flow Positive Business of Your Own Must Do #3
Business Articles | November 29,Lebron 10 Elite, 2007

I want to
share with you five things,Coach Factory Outlet Online. If you get these five things right, then your
business will pay dividends to you every single time,Lebron James Shoes. The third is keeping your ratio of direct
costs to indirect costs very high,Jordan 5 Grape.

We’ve
discussed the importance of using other people’s money to invest in your
company and keeping your fixed costs as low as possible. Now,Coach Factory Outlet, here is the third thing you must do to
have a cash-flow positive business.

3,Jordan Grapes 5. Keep the ratio of direct costs to
indirect costs very high.

In business
you have many,Cheap Lebron 10, many functions. A lot of you work at companies. It could be the
accounting department,Coach Outlet, the human resources department,Grapes 5, or the sales and
marketing department.

There are
many functions in a business, but only some of those functions are directly
related to your sales.

Is the
manufacturing department directly related to sales? Yes; they are actually
producing the thing.

If you have
a seminar business, is the person who teaches the course an indirect or a
direct cost? That is a direct cost of getting and delivering the sale.

Are the
sales people for it a direct cost or an indirect cost? They are a direct cost.

Everything
else is indirect.

So the only
people you want to be paying are the people doing the doing or doing the
selling.

You want
everyone either doing the doing or doing the selling!

You want to
keep all the other costs infinitesimally small.

If you do
that, do you think your company will make money? Think about it for a moment.
All of your costs are going to selling and delivering. It is really hard to
lose money.

If you have
one salesperson and one delivery person and you have three people in accounting
and four people in HR taking care of the two people that are doing the work, it
won’t work. I wish I were joking, but I have seen companies just like that. I
have seen a 20-person company that had seven layers of management. I was called
in as a consultant for this company that had 20 employees and was saying Who
at the bottom of the pyramid is holding this thing up? It didn’t take much to
tip it over. If all of the people at the bottom are doing all the work, then
they have the entire structure sitting on top of them.

It is a
very simple principle.

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