Home

If you sell below cost you have to buy below cost

I originally heard this comment applied to sourcing product. Obviously the concept of buying below cost is, by definition, impossible and it was intended as a pithy call to action designed to get people to focus on making sure that they were continually searching to find lower cost product.

I think that the concept of buying below cost has a much wider application in today's economy and I believe that it is a universal call to action that every business owner should follow. What it involves is a strategic examination of the processes the business uses and requires a business owner to focus on continually reassessing their business model.

If you go through an exercise to question all your basic processes and procedures you may well find unexpected efficiencies that will enable you to lower your cost structure and become more competitive while still driving acceptable margins. When you do that and make changes to your business model you are starting on the process of buying below cost.