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What your business budget and the Federal Budget have in Common

“We’ve got to cut the budget.”
“The deficits are way too high”
“We must get spending under control”
“We need to raise revenues”

Unless you’ve been living in a box for the past year or two, there’s no doubt you’ve been hearing a lot about the Federal budget. Political candidates across the ideological spectrum have been discussing it, the cable news shows have covered it endlessly, and your business associates and neighbors have probably expressed their opinions.

But this is not political commentary and we don’t have a dog in this political fight (we are followers of the great Groucho Marx who said “I would never belong to a club that would have me as a member”). This is about making money. We like making money. And if you do also…read on.

So we’ll put you in charge of the Federal Budget. The voters are demanding cuts…significant ones. What will you cut?

The $4 billion dollar “Legislative Brach Discretionary Programs”? Sounds like pork in the district of their esteemed colleague to me?

The $2 million dollar research grant dedicated to learning the impact of disco music on monkeys?
Get real! We are talking about a $4.1 trillion with a “t” budgeted outlay and only $2.4 trillion in tax revenue coming in the door, so we only need to whip out the credit card for $1.7 trillion to keep the lights on. That’s chump change and won’t make a dent in the Federal deficit. Sixty cents of every dollar in 2010 goes to Social Security, Unemployment and Medicare/Medicaid. And that’s why the politicians only nibble around the edges when they get around to cutting budget items.

So what does this have to do with your business budget? Everything!

Managing a business budget over the past few years hasn’t been easy – or fun. You’ve almost certainly had to cut and deal with the reality of flat or decreased revenues, just like the boys and girls in Washington DC. And this year’s budget cycle is probably no different. More cuts. And if you had to make a bet about next year given the political and economic environment would you bet against further cuts?

So what have you been cutting?

Probably many small items have come off the spreadsheet quickly – like the few thousand dollars dedicated to the off site company meeting and those little employee and manager perks that seem so innocuous in good times.

Many companies have also tried to find savings by reducing marketing expenses and terminating the low performing sales reps.

And for all your effort and good intentions your result is exactly like the politicians who wrestle with the Federal budget. You are only nibbling around edges.

And if you remain on your current trajectory you will repeat this process year after year until a more agile and flexible competitor steals your market share.

If you want to make real cuts you have to go where 65 – 70 % of your costs are – your labor expense. And that’s the dilemma. How can you reduce your labor costs and still get your work done? You’ve probably already went through a round or two of staff reductions.

Here’s your answer: CogNet – we can get your work done cheaper, better and faster.

Cognet is the leading provider of offshore Business Process Outsourcing (BPO) services to companies in the Human Resource Services business. For example, if you are in the Payroll or Benefits Administration business today we can support your “back office” tasks in a Global setting, freeing you to direct your time and money towards your clients.

Here’s how we do it:

  • We document everything at the start. To ensure the business process is fully defined and understood.
  • We do your work on your system. We leverage the Internet to perform your tasks exactly the way you want – only faster, better and cheaper.

We measure everything. We must to continually optimize and comply with our contractual standards.
Your business result is a permanently reduced and permanently lower cost structure. And rather than investing in another Staff Accountant you can hire a good Sales Rep to help grow your business.

The politicians can fix their structural budget problems by raising taxes. You don’t have that luxury. But you can permanently lower your operating costs.

Talk to CogNet.

 

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