Reducing costs without killing business

Identifying cost saving potential

Targeting Cost Reductions

How do we decide what costs we should cut when making efficiency savings in our businesses?

There are many ways to do this, but here is a method that you can use with staff, in a workshop environment. How to generate ideas that have real long term commitment and understanding from the managers who will have to implement them.

Their ideas , after all, are the ones that will work best.

The principle is to identify the activities at the centre of your business success. The things that you do that your customers really value. The reason that they use and recommend your services.

Think about customers for a while and then ask these questions

When customers use our services:

  • What are the Must Have deliverables?
  • What do we Need to Do to keep those deliverables consistent and successful?
  • What do we do that is a Nice to Have that does not directly contribute to the above?

Look at every activity that the team delivers during a typical business month, list them out, summarise them on a chart and then vote.

Here is the rule for the voting. – At least 75% of the team must agree that an activity belongs in a category. Only debate those items that do not achieve immediate agreement. If you can not agree then the activity defaults to the least important of its disputed categories. Pin the chart to the office wall to remind yourself and the team of the decision taken. It sets out the scope of what you have to do next.

Now you have a list of activities for potential cost cutting. Anything in the Nice to Have category is a target. Everything else is safe for now.

When you reach your target cost reduction you have to congratulate the team for achieving it. If the target is not reached you need to ask them to try again or make some unpopular decisions yourself.

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About the Author: Adam Blackie is a professional Interim Manager who leads service delivery teams through their change programmes. He works with CEO’s and their Boards in the UK to change the way technology is used by staff and their customers.


About Adam Blackie

A career Freelance Accountant who specialises in leading helping others to hold onto their money.
This entry was posted in being efficient, cost cutting, customer service, Implementing Change, leading change, leading change management and tagged , , , , , . Bookmark the permalink.

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