The Joy of Cost Cutting

Most of us are fans of one sports team or another. At the beginning of each season we enjoy calculating the chances of winning a championship. In the middle, we do some second guessing of players, coaches, managers and ownership. By the end of the season, heads are bowed, wagging from side to side, as we wonder, “How did it come to this?” In the pack of teams, only a few make it to the finals and only one champion team appears.

Owning and operating a small business is very similar. The business starts with a flare of excitement. Hope is in the air. After a short honeymoon phase, anxiety sets in and one begins to wonder if it all made sense. The reality is that only one in ten small companies can be judged successful with the passage of years. For those survivors, there is always a tweaking of the team and supporting ingredients that has to happen.

In the early stages, the business owner is very much a risk taker in pursuit of his or her dream. While some investments made by the company may be well thought out, others are often impulsive, perhaps the result of a great salesperson who convinced us that they have the one ingredient that will make the company successful. Sometimes owner behavior is no better than a gambler or the guy who tosses a coin in a wishing well, then another coin and then another.

Cost cutting is a healthy process if not overdone. It is not wise to go from a spending frenzy to a spending freeze. Few organizations can take the morale and customer quality hits that come with a drastic change in economic focus. But there are definite pluses to cost cutting. Cost cutting can be as much a process of discovery as revenue generation. After all, “money saved is money earned.” If one was to take a look at any company, imagine yourself in charge and ask yourself, can we elliminate 10-20 percent of this cost or that. Usually you can find some savings. If the resulting quality is not altered significantly and the revenue discovered can be put to good use, that is a win. Perhaps that money will go to a quality win for the company, now at a time when investment is more rational.

It’s easy to make people happy when you are passing out money. It is a test of character, intelligence and teamwork to execute cuts and to do it wisely. I suggest you take the challenge. You might be pleasantly surprised.

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