Growing Revenue vs. Reducing Expenses

We recently had an inquiry on our position that most times reducing expenses is a much quicker improvement to the bottom line compared to growing sales. In reflecting upon this, let me share with you this example:

Currently w/ Expense Reduction w/ Additional Rev
Revenue $100,000 $100,000 $140,000
Expense Reduction % 0% 20% 0%
Operating Margin % 10% 10% 10%
Net Income $10,000 $14,000 $14,000

To get the same net profit, you can reduce your expenses by one dollar, or grow your revenue by $40.

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