At the turn of the 20th Century, steel magnate Andrew Carnegie controlled among the greatest fortunes in the history of the world. His steel empire accounted for 80% of US steel production and the profits were pouring in. Carnegie ran his business with one simple, overriding philosophy: control costs and profits will take care of themselves.
His logic was that prices and sales are cyclical. They’re subject to multiple market forces all of which are completely outside of his control. You do not require a PhD in Economics to figure out that good economic times means higher sales and better prices, while bad times mean lower sales. Since you can’t control the economy however, Carnegie chose to concentrate on what he could control.
Costs 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. Carnegie routinely authorized massive investments in new technologies because they’d translate into a reduction in production costs. Without computers, his bookkeepers could tell him to within a fraction of a penny the total cost of producing a ton of steel. That kind of knowledge let Carnegie stay profitable, even during the worst economic downturns.
Personally, I’ve always made it a practice to follow the wisdom of successful people. Carnegie was completely correct. You can’t control market forces so you should not bother to try. But you can control your cost of goods and other overhead. When you can cut costs, you keep those profits for the life of your business. So, stop worrying only about sales and pricing. Begin controlling costs and derive actual business advantages.




