About this video
A $40M company cut overhead 10% by having department leaders mark up their own budgets. Jay on the expense optimization review.
Transcript
Jay Dotson: So we did this with one client. They're a $40 million business, and they had a goal of targeting a 10% cut to their overhead, creating $2 million of recaptured margin.
Jay Dotson: So how did they do that? One of the main things he came to us with was, "I want my department leaders to own their budget and to think like CEOs." He had an accounting staff, but he wasn't getting that cross-functional work from his finance team that would create this sort of gain for him.
Jay Dotson: Does anybody here have department leaders? Yeah. It would be helpful if they thought about profit and cash flow the same way that you as the owner do, right? We want them to impact that, and if you can even incentivize that sort of behavior, it would be beneficial.
Jay Dotson: So in the first 45 days of working with this company, we were able to recapture $2 million of their margin that they can then deploy, take off the table, or use to fund kingdom-advancing things, create impact and multiply it into other areas.
Jay Dotson: So how do you do it? We call this an expense optimization review. You take your vendor list over the last 12 months and you go and mark it up. Which of these vendors are profitable expenses? Which ones are reviewable, where maybe we can get better, faster, cheaper, a better ROI for what we're paying them? And then what is ultimately waste in the organization?
Jay Dotson: If it's a more simplified business and you don't have department heads, it's as simple as that for you. If you have department heads like this organization did, they had fun with it. They brought this to their teams. Their teams marked up their own sheets, created their own PowerPoint presentations, brought them to the CEO and advocated for their own cuts.
Jay Dotson: And so we were able to create a $2 million increase in cash for them just by running this simple process.
