Cutting costs became the rallying cry for the vast majority of companies over the past several years. The recession hit hard. Even those organizations which never anticipated the need to watch their expenditures found themselves wielding a pretty sharp axe.
As we emerge from the recession, many companies are bringing with them a valuable lesson learned: that cutting costs can be a strategy for jump-starting growth and giving them a competitive advantage. As a result, companies have taken to scrutinizing each and every penny spent, realizing that one-time “improvement” expenses may result in a somewhat limited benefit that simply does not justify the cost. The resulting culture is one of cost management, with an eye toward positively impacting the bottom line.
Perhaps the most important thing to remember is that every dollar saved is yet another dollar of profit—or a dollar that does not have to be borrowed. That doesn’t mean you can take a hatchet to your business without any regard to what expenses you are slashing. Rather you must carefully evaluate how each expense is related to sales, overhead, and profits. You must also keep your employees in mind as you eliminate expenses. These days, employee engagement is paramount, especially in light of the fact that many companies continue striving to do more (work) with less (employees). So while something like free bagels every Monday may seem like an unnecessary expense which could easily be eliminated, knowing they will be greeted by a chocolate chip bagel with cream cheese may motivate employees to pull themselves out of bed when they would rather pull the covers up over their heads.
Far greater cost savings can be achieved by digging deeper. Take the time to carefully review employee performance. If you discover that one worker is getting far more done than another worker charged with performing the same tasks, you may stand to gain greater efficiencies and savings simply by instituting some simple training – or by asking that employee if there are any challenges standing in their way.
And while we’re on the subject of employees, don’t forget to include them in your cost management initiative. Chances are they have their finger on the pulse of the company’s day-to-day operations far better than most members of management. They can point out waste or redundancies, giving you a ready-made target for your cost-cutting axe. Remember to reward them for their insights, however. This will not only keep them engaged on the job, but also motivate them to identify further areas for cutting costs in the future.
If financial matters are your life’s vocation, contact Daley and Associates. We offer superior recruiting and placement results, specializing in auditing and financial placement.