Revenue Growth or Cost Cutting??

Source: Quora

Thoughts

When you read the above headline, which option did you pick at first thought? Without hesitation.

Now, let us take a step back. From what position/ role in life did you make that choice? An employer? Business owner? Self-employed? An employee/ salaried worker? Shareholder? Breadwinner? 

If you made that choice from an employee/ salaried employee, share with me your thoughts for you to make that choice in that split second?

"Position-sizing"

As an employee/ salaried worker, how high in the corporate hierarchy? Fresh graduate? Executive? Manager? Team Lead? Senior Manager? HOD? C-suites? Chairman? B-member?

If I were a salaried employee at a certain hierarchy downwards, I would never wish for my employer to go on cost cutting programmes as this mean that rice bowls will be impacted. Even if cost cuts are being implemented, how far can an organisation go in this option without sacrificing or affecting future potential growth of the company's revenue? Without having employee double-hatting or taking on an increased workload with a corresponding increment?

From a certain hierarchy in the food chain upwards, do you think a cost-cut programme would affect me the same or greater than those below me under the organisation structure? Or would it even affect me at all in the ordinary course of a corporate life? Look around us during this current once-in-a-century pandemic. Observe and assess who are the ones most impacted in these cost-cut measures.

Position-sizing within the context of portfolio allows one to control/ mitigate risk and maximise returns right?

.. so, how does "position-sizing" come in play here? I hope you got it! ;)

Cutting Expenses Will Not Create Income Growth

Let's look at this topic from another angle.

As an investor, do you invest in a company with revenue growth year-on-year over 5-10 years of history or one with stagnant revenue during the same period? Let's face it. Most investors do not like revenue stagnation although the bottom-line improves. Do we even need to discuss about declining top-line scenarios? 

As investors, we do not know whether there are plenty of waste to trim as we are not insiders. Alot of times, C-suites and B-members are so laser-focused on the bottom line that they lose sight of their true objective - actual real growth. 

Unfortunately, this applies to many of us in our journey to Financial Independence. We may become so laser-focused on reducing expenses such that we lose sight of the big picture or our own personal objectives. Why is this so? Simply because it is the easier of the two options. So much less effort required. Same for the companies. Do not believe? Try it!

Muscles of Income Growth

Because we inherently choose the easy way out, we tend to forget that the best way to increase the margin between income and expenses is to increase income. And how can that happen? 

I will share with you my "secret" on how I will increase my income.

My "secret" is..

I will need to invest in building the muscles that enable income growth. 

To begin with, I first need to identify the muscles in my industry or line of work. Then, invest resources to work on these muscles I have identified. This may allow me the opportunity to develop a competitive strength to gain more income and therefore, the ability to increase margin between income and expenses.

What?!?! This is a secret?? Now you know!

Me, myself and I or is it?

As an individual responsible for the future value of my human capital, my strategy will be to put more emphasis on the "how"of I am going to increase my income. This will outpace the value of cutting expenses. I mean, how much can one cut expenses without sacrificing quality of life - either one you desire or are comfortable with. It will eventually come to an optimised point.

Investing resources on those muscles may sound simple but it is definitely not easy. I quote with confidence (because I believe he is cool with it) from a senpai, SMOL, "Success is what we have to sacrifice to achieve it". Read: This 99 years thingy...

While I will do what I can but lest we forget, there is alot of external factors at play too. For those of us whom may have managed to climb to the top of the mountain, let us not forget those who may not have reached the same desired destination but may have equally made sacrifices - hardwork, sweat, labour, time and youth etc. They might be our loved ones - our family and friends.

Hence, I would rather LadyLuck smile at me at all times, or at least most times. Wouldn't you too? ;)

My Dreams For You

Revenue Growth or Cost Cutting?? How about priority and optimisation?

There is so much more to learn from fellowship who have walked the path of Financial Independence - those who are coming down the mountain; those are at the top of the mountain; those who are near the top of the mountain; those who are going up the mountain. Read: 2006-2020: The Awakening

Apply your personalised strategy to your individual self as a priority. Your values at work and in finances will then be pretty much aligned.

You are your own company.

Keep safe and stay prepared!