Efficiency, effectiveness: Top line, bottom line

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cost cutting business class
The business class airline meal: Undoubtedly one of the first costs to cut in challenging times (and this very expensive meal doesn’t look very tasty, does it?)

The austerity cost-cutting process initially can be highly painful; then (in a strange sort of way) it becomes fun. You start with the biggest, obvious and most glaring wasteful expenses, and then start reviewing the other costs.

It is dangerous to be silly about cost-cutting. Do you really save money by curtailing free coffee for your employees (if they actually drink the stuff in the office) if it causes them to leave for long off-site coffee breaks, or demoralises them with the loss of an expected perk?

(I’m not sure how things will change if austerity becomes the rule of the game at high-tech firms such as Google, which makes it a business of providing virtually unlimited free food in virtually every work area.)

Yet the savings process can achieve house-cleaning refreshing results. For example, we’re using a forms management tool that costs $24.00 a month. It’s pretty good. There is a free variation that would work quite effectively for our business for nine months of the year. Over the years, however, we paid the recurring charge each month, accumulating many unnecessary forms and documents. Last night I cleaned out the excess forms garbage — streamlining the documentation — and we’ll put the $230 or so in annual savings to work on other things.

Of course, everyone has sacred cows, or expenses they feel are essential. Here the issue can be complicated, in that curtailing costs should not be at the expense of the business’s long-term viability. The answer, to me (as we’ve gone through the exercise) is to combine openness and respect — and do whatever we can to preserve relationships and product quality. This means consulting with individuals affected by cost cutting and determining where possible to achieve the holy grail — reducing costs while improving quality and business capacity.

As an example, we’ve also implemented a cost/expense review committee, led by individuals with variable income who will ultimately benefit if costs are reduced. Every week, we find new savings as formerly “essential” costs are put under the microscope.

It’s a worthy exercise.

Have you reviewed your marketing expenses, and determined if they are really necessary or effective?

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