Hot Tip: Focus On Variable Expenses

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As founder of Allen Systems Group, an enterprise software company in Naples, Fla., Art Allen's favorite cost-cutting technique is different from anything we've ever heard a CEO recommend. "Figure out what your fixed expenses are and what your variable expenses are. Then consider doing something very simple -- one month, don't spend anything at all on your variable expenses. It's unbelievable how much that can help," he says. "There's not a company in this world that cannot learn how to manage by deferring its variable expenses for one single month."

Lest you tell yourself that strategy is only for large, well-established businesses, know that Allen has relied on it, on an occasional basis, since he bankrolled his company with only $2,000 in personal savings. "I can't think of an easier way to reduce your company's annual expenses, boost productivity, and improve its bottom line," he concludes.

This article was adapted from material that first appeared in Inc. magazine in July 1999.

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