Wednesday, January 21, 2009

Wisdom Carnegie

At the turn of the 20th Century, steel magnate Andrew Carnegie controlled one of the greatest fortunes in the history of the world. Carnegie ran his business with one simple, overriding philosophy: control costs and profits will take care of themselves.

His logic was that sales and prices are cyclical. They were subject to multiple market forces all of which were completely outside of his control. Costs however can be strictly controlled. Any savings gained from cost control are usually permanent. Therefore, improvements to your business infrastructure that are designed to eliminate or reduce costs are always worthwhile.

Personally, I have always made it a practice to follow the wisdom of successful people. Carnegie was completely correct. You cannot control market forces so you shouldn't bother to try. But you can control your cost of goods and other overhead. When you can cut costs, you derive those benefits for the life of your business.

Therefore, stop focusing solely on sales and pricing. Start controlling costs to derive real business benefits.


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