5. Maximize Revenues and Minimize Expenses
Measure your inflow and control your outflow; don't chase profit, but let it follow your effort.
Many of you might think it is natural for expenses to rise at the same rate as revenues, but this is not true. You should not be misguided by the preconceived notion that expenses rise in tandem with revenue. Continuously striving for creative ways to maximize revenues while minimizing expenses — this is the mindset that will lead to high profitability.
For example, suppose a company has sales of 100, with the requisite human resources and production facilities to achieve that. Now, if orders jump to 150, businesses will generally increase human resources and production facilities by 50 percent to meet demand.
This kind of simple math must not be done. When orders increase 50 percent, you may want to increase your workforce by 50 percent to keep pace. However, you should limit the increase to 20-30 percent and find ways to work more efficiently. By doing this, you are able to create a highly profitable business structure.
The Twelve Management Principles
- 1. Clearly State the Purpose and Mission of Your Business
- 2. Set Specific Goals
- 3. Keep a Passionate Desire in Your Heart
- 4. Strive Harder than Anyone Else
- 5. Maximize Revenues and Minimize Expenses
- 6. Pricing Is Management
- 7. Success Is Determined by Willpower
- 8. Possess a Fighting Spirit
- 9. Face Every Challenge with Courage
- 10. Always Be Creative in Your Work
- 11. Be Kind and Sincere
- 12. Always Be Cheerful and Positive. Hold Great Dreams and Hopes in the Pureness of Your Heart