How to Optimize Cost Management Approaches

Profit, not revenue, is the key to success. Here's a 5-step Margin Analysis framework to track profit vs revenue As a financial consultant, I've worked with businesses struggling with profitability due to a lack of in-depth margin analysis. Managing your margins can be a game-changer for your bottom line. I work with clients on shifting their mindset that margin analysis isn’t just a one-time strategy; it’s a continuous process. To help clients stay on top of their game, I put together a checklist of daily, monthly, and quarterly habits to be sure you’re always optimizing your margins. Daily Habits: 1) Review Sales and Cost Data: Do a quick check if daily sales are in line with your projections and monitor unusual changes in costs. 2) Track Key Performance Indicators (KPIs): Focus on daily KPIs such as gross margin percentage and average order value to identify issues. Monthly Habits: 1) Analyze Margin Trends: Compare your current month’s margins against previous months to spot trends or anomalies. 2) Update Financial Projections: Adjust forecasts based on actual performance and any market changes. 3) Review Profitability by Product/Service: Identify which products or services are underperforming and consider adjustments to pricing or cost structures. Quarterly Habits: 1) Conduct a Comprehensive Margin Analysis: Deep dive into your financial statements to assess the health of your margins. Look at (COGS), operating expenses, and net profit margins. 2) Reevaluate Pricing Strategies: Based on your margin analysis, adjust your pricing strategy to ensure optimal profitability. 3) Optimize Cost Structures: Review your cost management practices and look for opportunities for cost reductions or process improvements. Hope this simplifies the process, and helps to start building these habits. Also, I've attached a brief guide on How To Strategically Improve Profit Margins If you need help developing and executing a financial strategy DM me ___________________ Please share your thoughts in the comments Follow me, Beverly Davis for more finance insights

If I were Head of FinOps of a SaaS company, here’s my 4-step playbook to cut up to 20% off our cloud costs, avoid expensive vendor lock-in, and align my entire company on cloud spending: This playbook is simple, but you’d be surprised how much the basics can help transform your bottom line. Here’s my playbook: 1. Understand your workloads You need to know what workloads you’re running and whether they’re predictable or dynamic. - Predictable If you have workloads that don’t change a lot – as in, you can forecast cloud costs accurately — lock in volume discounts like reserved instances or savings plans. - Dynamic If you have no idea what the resource profile of certain workloads will look like,  say you’re innovating, stick with on-demand capacity. You don’t want to risk overcommitting to enterprise discount pricing (EDP). For instance, if your actual spend is $70M but you commit to $250M, that’s a painful conversation with the CFO waiting to happen. 2. Stop running your engine overnight Instances running 24/7 without being used are a hidden cost killer. Implementing automated scheduling systems to power down these instances during periods of inactivity can significantly reduce costs. It’s like turning off your electric car overnight so you can drive it the next day without recharging. This may be straightforward. But at scale, this simple change can free up a significant budget. 3. Attached storage waste Storage utilization is often overlooked. One of our customers had a petabyte-sized S3 bucket costing $10k per month – yet no one knew what it was for. Right size your instances and audit storage usage regularly. Otherwise, you’re wasting resources like using a tank to kill a rat. 4. Make cost management a KPI Cloud cost visibility must be a company-wide priority – a top-level KPI so everyone knows they’re accountable. Focusing on this can lead to up to20% savings as people start paying attention to what’s being spent and why. Final thoughts: Cloud cost management is like fitness: every day counts. You won’t see the results immediately, but your expenses will balloon without consistent effort. Start today, focus on the basics, and watch your costs shrink over time. Pay now or pay later – the choice is yours.

I recently completed an intense opex reduction sprint (measured in days, not weeks) for a middle-market company. Sharing my top 10 takeaways below that are relevant for both company leaders and financial sponsors 👇 1. This is not purely a dogmatic exercise in cost-cutting and margin expansion. Yes, it can be those things, but in most cases the 'right' outcome is freed up firepower to redeploy towards untapped growth priorities. 2. A fundamental reinvention of a company's cost structure is both critically important and hard to successfully land. A recent Boston Consulting Group (BCG) study showed that cost management is the top executive priority for the third consecutive year, yet companies reach only 48% of their cost-saving goals on average. 3. It's hard to appreciate just how unglamorous and low-level/granular this work needs to be if done right. Invoice-level data is analyzed, thousands of vendors are evaluated, and the most junior people in the company need to have a seat at the table. This is a scalpel-type removal of unproductive costs and not a peanut butter spread of generic savings targets. 4. There must be visible and unwavering CEO commitment to ensure the full organization understands that this is not just another false start exercise in analysis. 5. Companies across the full spectrum from growth to distress can and should be thinking about this strategic imperative. It can establish a more sustainable financial position for companies dealing with financial dislocation but can be equally impactful for those in a position of strength with high levels of investment needs. 6. It is almost impossible to land this level of change without some disruption, but thoughtful upfront planning can help with risk mitigation. 7. Be the example...COO flying coach, leadership team foregoing a planned offsite, cutbacks in funding for C-suite 'pet projects' with questionable ROI, etc. 8. Nothing can be off limits - the minute leaders start to irrationally protect certain areas of spend without clear business logic, buy-in evaporates and eventual impact is decimated. 9. Importantly, this can all be done while protecting employees. Sometimes headcount reductions are necessary and warranted, but it is often a blunt tool for leaders that don't have the right handle on their underlying non-labor cost structure. 10. Finally, this is a perfect example of work that carries an attractively asymmetric risk-reward profile for companies. I did a quick (and free) upfront audit to identify size-of-the-prize/viability and only got paid based on savings delivered. Happy to be a sounding board for anyone struggling with a bloated cost structure who is thinking about heading down a similar path.

I was recently working with a client. What I uncovered was unreal. SaaS stack is bleeding cash...... Why? They were paying for unused software licenses. This is what I call "zombie spend." It’s a true paradox. Many VC-backed and pre-IPO companies face low cash runways. Yet, they're unknowingly bleeding money. Your company pays for unused services. Expired software licenses often go unnoticed. Duplicate subscriptions drain resources silently. This "zombie spend" has a profound impact on VC-backed and pre-IPO companies. It erodes your financial health. It can significantly reduce valuation. Especially when looking for an M&A exit. Imagine missing your target valuation by millions. You might wonder about the CALCULATION. For every $100K in savings and applying a multiple of 10X, you get a valuation impact of $1,000,000. If it is 20X, multiply it by $2,000,000! All loss in valuation is because of avoidable, forgotten costs. The good news? You can fight back against this silent killer. Here are THREE actions you can take right now: 1. Conduct a full SaaS subscription audit. Identify every single tool and license. Creating a simple list of all the software you are paying for in Google Sheets also works. This exercise should take approximately two hours to complete. 2. Centralize your software procurement. No more rogue departmental purchases. Review the software you need on an annual basis. 3. Evaluate ownership for each license. I have seen situations companies paying for premium subscription without making use of the premium features. What do you think? Do you have a zombie spending problem? ---------------------------- Hi, I'm Sunil. I partner with PE-backed and pre-IPO biotech, healthcare, and tech companies to streamline their financial operations, cutting close timelines by up to 76% and ensuring they're audit-ready, M&A-optimized, and IPO-prepared, without the high price tag of a big firm. #CFO #FinanceLeadership #PreIPO #SaaS #CostOptimization #M&AExit

Is your business leaking money?  Financial control can plug the holes. Without proper financial controlling, your business could be draining money without you even realizing it. Poor cost management leads to budget overruns, wasted resources, and shrinking profits. It’s a silent killer of growth and success. Here’s how you can use financial controlling to tighten your financial ship: 1. Set clear budget targets 2. Monitor expenses in real-time 3. Analyze variances between actual and planned costs 4. Identify cost-saving opportunities 5. Implement cost control measures 6. Track key performance indicators (KPIs) 7. Provide regular financial reports to management With these steps, you’ll gain a crystal-clear view of your financial landscape.  You’ll spot trouble areas before they become major issues and make informed decisions based on solid data, not guesswork. Financial controlling helps boost your bottom line. It’s not just about cutting costs—it’s about optimizing your financial resources for maximum impact. Don’t let poor cost management hold your business back. Adopt financial controlling and take charge of your financial future. #financialcontrolling  #businessandaccounting  #finance

Controlling Cloud Costs: A Strategic Imperative The benefits of moving to the cloud are well-documented—agility, scalability, and the ability to deliver solutions rapidly. These are key drivers of modernization for many organizations. However, the financial realities can be surprising if not actively managed. Cloud adoption often begins organically and can quickly become a significant expense if left unchecked. Managing these costs is no small task, but it is critical to address them early and effectively. Here are some strategies to consider: 1️⃣ Establish a FinOps Practice: Tagging and monitoring expenses ensures visibility. Regularly audit your resources to identify and shut down unused services that contribute to unnecessary spending. 2️⃣ Leverage Reserved Instances and Savings Plans: To optimize your costs, understand the differences and benefits of these offerings compared to on-demand pricing. 3️⃣ Reevaluate Workloads: Overprovisioning or failing to reassess workloads post-deployment can lead to inefficiencies. Regular evaluations and adopting hybrid or cloud-agnostic architectures can yield substantial savings. 4️⃣ Engage Cross-Functional Teams: Collaboration between finance, procurement, and engineering is crucial. A shared understanding of cloud cost dynamics fosters better decision-making. With intentional strategies, organizations can regain control over cloud spending and achieve cost optimization without compromising innovation. How is your organization managing cloud costs? Let’s exchange ideas and best practices to navigate this ever-evolving landscape.