Blinded to reduce expenses----Penny Wise Pound Foolish

In the mad craze to cut cost, it is never wise to reduce overhead expenses unnecesarrily. Have you ever heard of the maxim,'Penny Wise & Pound Foolish'? - Save on the minor & chicken feed expenses & spend extravagantly or waste on foolish and idiotic projects.
Penny Wise
How much does saving on photstat papers, delaying intake of key personnels, switching off lightings, etc contribute to overall expenses reduction?
Pound Foolish
And how much does re-doing of entire office due to faulty design or materials used, and how much does flying in a bunch of technicians from overseas to repair machineries , contribute to overall expenses reduction?

Sometime increasing the expenses works the reverse-you actually increase your profit, which is why you wanted to reduce expenses in the first place!

See this link.
http://www.globeinvestor.com/servlet/WireFeedRedirect?cf=GlobeInvestor/config&vg=BigAdVariableGenerator&date=20061214&archive=cnw&slug=C7264
Dectron announced a 3rd qtr increase of gross profit margin YOY despite a huge increase of administrative & selling expenses due to higher shipping / freight cost & rising depreciation / amortising deferred costs. Revenue for 1st 9 months up USD6.3million or 17.6% YOY, the growth attributed to doubling sales & cost reduction effort.

Read my lips........reducing expenses is not the same as reducing costs, although you may need to reduce expenses to reduce costs. Huh? Forget about what I have just said. Some people never learn.
Increase productivity by all means. You will get more for the same, which means you don't reduce expenses but still get higher revenue ( & thus higher profit, hopefully.....unless the finance people have bungled in their costing!)
Reduce direct materials cost. Localise your direct materials if cheaper. Or if you cannot ( 'cos materials cost keep rising these days!!), increase your selling price & sell more. More is more. More is more profit.

So if you reduce expenses by RM10,000 per month and gross profit is still in the red, compared to you increase expenses by RM50,000 per month and revenue / gross profit increase two-fold, which is better? You don't need a seven-year-old to teach you simple arithmetic, do you?

Increasing your profit in lieu of reducing your expenses, which seems convincing? Examples: if you don't have sufficient people to sell your products, or if don't have sufficient stocks to make your products, or if don't have sufficient products to sell (??) ........enough said.

If you still don't get it, get your head check again!!