Watch Out for Pets and Orphans

Make sure you are spending money where you should.  Do not go overboard in pet areas.  But do not starve your orphan areas that you know less about or care less for either.
•    Look at your past spending or budgeted spending for operating expenses.  What gets the big chunks?  Where do you spend very little money? 
•    Does that strategically make sense?  Should spending in a particular area set you apart?
•    Did you really intend to spend money that way?  Or did it just happen?
•    What if you started with a blank sheet of paper and budget operating expenses without any knowledge of how you spent the money in the past?  Would you come out with a very different number and allocation?
•    How did that spending turn out?  Did you get what you expected?  Do you see any patterns, like often under-delivering?
•    How do you compare against similar companies?  Where do they spend more?  Where do they spend less?
•    What would your outside advisers say?  Do you spend too much or too little overall?  Would they allocate the dollars differently?
•    What would an expert say in an area?  Have you gotten a view separate from your regular supplier in a long time?

Challenge yourself on how you spend on operating expenses.  Take a step back.  Give yourself a new view.  Get an outside view.  Guard against your biases.


 

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