Cut costs and grow your business…
We’ve all been there, annual budgeting, 3 year planning, ‘cost saving’ initiatives, time to be frugal and treat ‘every penny’ (Dime, Euro, Rénmínbì, insert currency as necessary), you get the picture, as if it’s ‘your own’. Common business mantras.
So how do you cut costs and grow your business?
Simple, you build a culture of ‘cost consciousness’.
If the ‘cost conscious’ vibe is part of the culture you operate in, it’s no more than savvy business sense.
It’s how you roll.
It’s not the ‘heavy’ term of ‘cutting costs’ that is the focus, ‘oh here we go redundancies…’ its ‘invest to grow’.
Be clear with where you need to cut costs, why you need to cut costs and what you expect of people to help you but once you do meet the magic number, how do you continue momentum of ‘cost consciousness’?
A request to cut costs or a cost challenge should be exactly that, an ‘exciting’ challenge.
You own your P&L, have complete accountability, you ‘own’ your numbers. Asked to cut costs is you being challenged to see what you can do differently.
In the right culture it lights your fire. You are calculated in your investments, always measure the returns, communicate, frequently, about what ‘is’ working and likewise when something does ‘not’. You curiously investigate what and how others get growth and apply learning’s, that you measure. Your team are the same. Searching for creative new ways to invest and grow.
Challenging yourself to work smarter with your investments, for a higher return, a want and a will to play your part as a ‘good corporate’ citizen in the collective cost cutting mission, is just what you do!
Because you know that the cost cutting will be reinvested into something BIG.
Reinvested into something where everyone wins.
The company modus operandi.
You divest to grow when and where you need to. You have the flexibility and the culture to pivot for growth.
This way of ‘being’, thinking about investments, ROI (Return On Investment), providing ongoing challenge to yourself and team in terms of what must be true to grow the business, is a way of life that you embrace. ‘Does it make the boat go faster?’ mentality is where you all win.
In open cultures like these the smarter you are with the investments, the more you can show the ROI the more ‘freedom’ you have to invest as you have a reputation for investing wisely to grow your business. When there is money to invest, where is it going to go?!
A wise man once said, ‘performance is freedom’, never a truer word said along side ‘What gets measured gets done!’.
Top tips for how you can work smarter to ‘cut costs’ or have a ‘cost conscious’ mantra to grow your business include:
- Ensure ownership of the Profit and Loss (P&L)
Provide leaders and team members complete visibility of the P&L which focuses the mind. Be open and transparent about what business costs and realistic about the forecasted growth, post any investment. Build commercial awareness into all personnel. People need to understand how and why the business has been successful in the past and apply this learning to the current plans. but also have courage to challenge the status quo, at pace. Having a healthy understanding that everything is a cost and what we do with the cost (investment) is critical as it builds a mindset of attention to detail and cost consciousness.
- Educate to accumulate
The more your people understand the top and bottom line and the performance of your business, what’s working and what is not, the more curious they are. Educating on cost management is just best practice. The more people are educated and encouraged to get involved with cost cutting, the more ideas and suggestions for improvements are offered. Every business has a wealth of experience at their fingertips. The more you educate your people as to where you are, where you need to cut costs and that you are open to ideas, the more they aspire to be forthcoming and engaged in offering solutions.
- Encourage challenge & solutions
It’s easy to get stuck in the day to day status quo. The more you can create a climate of challenge, in the right way, the more invigorating for all. It opens questions of why? Why do we spend X on Y? Why do we do what we do? Does it work? Is there a better way of doing it? Are we getting back what we expect in terms of ROI? The more you share the business challenge with your people and open the floor to challenge, encouraging solution orientation, the more solutions and ideas for improvement flow. Its easy to criticise, it’s harder to offer solutions but wow how exciting to be able acknowledged and rewarded people for doing so.
- Cost conscious performance management
Make cost cutting part of your every day by weaving it into all processes, performance management and ways of working. Do you have a ‘reinvestment’ challenge? Do you always have ‘After Action Reviews’ on performance of investments? What success metrics are you tracking? When things are not measuring up, what action do you take to change it? Do you assign a team ‘cost conscious champion’ each quarter to keep an honest eye on performance or ways of working? Make it fun! The smarter we can be the more our investments are challenged for return, the more focused we are on growth.
- Reinvest, reinvest, reinvest
Whether it’s a marketing campaign, promotion or training course be clear up front on the cost, the likely return and impact, measure success and how you will apply the learning’s. When there is a cost cutting challenge, what is reinvested where and what was the result? Sharing these organisation wide initiatives builds purpose and connection. This is when you have built a tribe of like minds that are vested in growth. This is where you build a tribe of people that are naturally cost conscious and want to speculate to accumulate to reinvest. It’s just what they do!
If you need help to identify the path to cut costs and grow your business and people let’s have a virtual cuppa to see how I can help you unlock the power of your people.