Perhaps the greatest power you have as a business owner is the power to choose – the power to make decisions. Much responsibility is associated with that power, as your decisions ultimately determine the success or failure of your business.

Quite often, we make decisions in business, then move on to the next opportunity or crisis. We simply live with the consequences for years and seldom reflect on our decisions.

In many successful large enterprises, formal processes are established to review prior decisions from time-to-time and evaluate if those choices are still the right choice as circumstances change. 

One area that is particularly challenging for any business to reexamine is a decision that resulted in a large capital investment. We recently worked with a company who had made a significant infrastructure investment and were quite resistant to the idea of looking back and evaluating this decision.

This company had invested in a large warehouse operation to support fulfilling product orders to their customers. Once that decision was made, it resulted in creating the following fixed cost infrastructure:

• Warehouse rent
• Warehouse utilities
• Warehouse maintenance
• Warehouse security
• Equipment, including racking, pallets, forklifts and trucks
• Information systems development and maintenance
• Personnel costs, including recruiting, hiring, training, management and firing
• Significant management time and money
• And much, much more!

As we reviewed this decision with them, we introduced the idea of outsourcing their warehousing and fulfillment operations. Although there was great resistance to change, the possibilities of converting fixed infrastructure expenses to variable expenses was too compelling not to pursue.

In this case, we were able to reduce their fixed costs from about $1 per item shipped to less than 50 cents per item shipped, resulting in a savings of several hundred thousand dollars annually.

You too have the power to choose. You can choose when you are going to reexamine some of your previous decisions to see if you would make the same decision in your current circumstances.

Need help examining your previous decisions? Give us a call. We’re happy to help!