Be aware of the real cost when cutting costs in your business, not all cost cuts are savings.
If you think you need to cut costs how do you do it effectively? Making cuts in the wrong areas can easily cause a trauma later down the line – often when you need it least!
Where to start?
Look at all costs associated with the running of your business in order to deliver your customer requirements
At ulookic we suggest that the correct approach is to always understand how ‘value’ flows through the business and at what stages they attract cost elements.
Let’s look broadly at each area:
Running Costs
Check all expenditure is relevant and up to date – all too often things grow organically without closing out existing expenditure. So often we find contracts continue after the service is no longer required.
Action: Review all cost control inputs and processes
Talk to us at ulookic about running costs – for further support and implementation. Also see more about adding value rather than cost in our blog Why Value Add is Key to Profitability
Customer Expectation
Review all areas of customer experience – Changing delivery terms to save money could cost you customer loyalty. Equally, not having your customer areas maintained within your business could change their perception of your business.
Paul was amused as he remembers being witness to a cost cutting edict being delivered with much vigour by the senior team. During the next major visit by multiple clients to the premises it was discovered that the customer toilets had not been cleaned – the search for the guilty ensued after a high-priced solution was arranged. As always this boiled down to a cost cutting of X% across the board and not a consideration on importance and value.
Action: Scale up or down to suit current customer needs and keep close to your supplier base
Talk to us at ulookic about customer deliverables – for further support and implementation. Also see more about how your suppliers can add value to your business in our blog Ensure Suppliers Add-Value to your business
Strategic investment
Review your growth calendar – ensure your model suits your own future expectation of your business. There is no point gearing up now for something that isn’t expected in the foreseeable future
Action: Define your future direction and associated timeline
Talk to us at ulookic – for further support and implementation. Also see more about diversifying in our blog on Business Diversification
Legal and governance
This area always needs constant attention to ensure your business is compliant with all relevant areas. Regularly meet with your professional advisors to keep abreast of latest information – There’s no point in focussing your resources on something that’s imminently obsolete – but it was a cheap deal!!
Action: Include in your boardroom review meetings
How we help at ulookic – Paul Blackman is our NED who often attends monthly or annual board meetings to ensure and support with a Structured Agenda / Key Tasks / Reporting Lines boosting output and expectation of deliverables
As a takeaway comment make sure your business process shows where value is obtained and what the constituent elements are. In addition, appoint a senior member to asses all cost saving ideas and solutions with NO areas excluded. Add an action summary to the Agenda at the next board meeting to be progressed.
ulookic are here to support businesses and the senior teams
We help you to identify your options and create a way forward. We are specialists and have a track record of delivery.
We help to change perceptions by assisting with improved working methods. We work to ‘align functions’ and increase your business ability and profitability.
Most of all u-look-i-c are Independent Growth Consultants, on your side!
We work directly with businesses, hands-on or as a senior advisor. ulookic are your independent partner.
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