Can you grow your small business without paying attention to your cost centers? Sure, but you’d probably be out of business pretty quickly. Think back to the explosion of the tech bubble. Runaway costs was one of the biggest reasons for failure. You simply must keep an eye on costs if you wish to be successful.
That’s exactly the approach Andy Bailey of NationLink is taking in the AllBusiness.com 6 for ’06 program. Bailey has planned for this year to be one of major growth in his company’s focused business groups.
The challenge Bailey now confronts is how to resume spending for growth without losing the cost-control discipline developed in the last three years. Managing NationLink´s cost centers will be every bit as important as ramping up sales.
Bailey plans to expand NationLink´s staff of 12, which is down from a high of 35. He also hopes to grow 2005´s $1.5 million in revenue to $2.5 million within 15 months – and double that again in a year.
"We´ve built a culture of cost containment and frugality, and we could lose that as more money falls to the bottom line and people are doing well," Bailey says. "It doesn´t matter how much money you make, you always spend it all. We can´t let ourselves get back into that trap."
NationLink has three major cost centers — Finance, Human Resources and Support. Their Finance Cost Center and Human Resources Cost Center are split between in-house employees and outsourced vendors, a strategy that has worked well for them. The Support Cost Center is one to keep an eye on. As their sales grow, so do their support needs. Managing this cost center will be a continuous process of watching where small changes can be made to get the maximum efficiency and looking for opportunities to turn this cost center into a profit center for the business.
I’m delighted to be working with Andy as he tackles the challenges of the balance between growth and costs. You can keep up with the happenings by monitoring Andy’s blog and by subscribing to the weekly 6 for ’06 newsletter.