Almost all companies have or will need to cut costs to survive in the current environment. Unfortunately, not all cost cutting is done smartly. Consider these three pieces of advice before making cuts:
- Put strategy first. Cuts across the board rarely, if ever, lead to effective results. Laying out strategy first helps you decide where to cut, and also helps employees accept the cuts as a step toward a goal.
- Focus on good customers. Rather than cutting valued services to valuable customers, "fire" high-maintenance customers who cause you unnecessary complexity. Focus on serving your more cost-effective customers who are happy with your products and services as they are.
- Keep your business simple. In a healthy economy, it's easy to overlook processes and activities that are redundant or overly involved. Simplifying them can save you money with the added bonus of increasing both customer and employee satisfaction.