Home Archives June 2007 Cost saving: 10 (good) ways to cut corners

Cost saving: 10 (good) ways to cut corners

| Print |  Email
Friday, June 01, 2007

Tim Hickey, principal at Tim Hickey Consulting Associates in Vancouver, Wash., has some pretty sound advice when it comes to cost cutting.

Don’t think first about what you can cut out, he says, but what you can improve in terms of your processes and operations. Don’t make cuts that reduce your revenues and, no matter what, don’t start sizing up your business like it’s a Thanksgiving turkey.

“Too often companies come in and just sort of think, ‘What can we carve out?’” says Hickey. “If you do that, you’re putting yourself at risk of death by a thousand cuts.”

Chris Adamek is practice director at ACME Business Consulting LLC in Portland. His best advice on cutting costs?
“There’s a certain amount of that that just comes from being more efficient,” he says. “Sometimes you’re not able to tie a specific dollar amount to it, but it still makes a difference.”

In sum, to realize some cost savings in your business, don’t cut just to cut. Identify and then tackle inefficiencies and consider the following tips for running a tighter ship.          

1. Invest in a marketing plan. Hickey is no fan of having talented, highly paid sales people spinning their wheels trying to find good sales leads. Instead, he suggests investing in a high-quality, focused marketing program. “Companies that cut marketing end up paying more for expensive leads,” he says.

2. Look for outsourcing opportunities. People see the word “outsourcing” and immediately think of a call center moving to India. But, says Adamek, there is much more to it than that. “Every function of a business can be outsourced,” he says, listing as examples payroll, marketing or creative services. “It’s just a question of what’s strategic to you and what isn’t.”

3. Eliminate one-off projects or operations. One-time customer projects rarely make sense for a company that doesn’t consider itself a custom shop. That doesn’t mean a firm shouldn’t consider new markets, but it does mean a company should have a clear definition of the services it provides and the products it offers.

4. Annually review software and other contracts. It’s not un-common for businesses to lack expertise when it comes to negotiating contracts with software vendors or to be paying for services they don’t need. Keep these costs down by reviewing such contracts annually to make sure you’re paying a good price for truly necessary systems.

5. Make regular technology upgrades. Still using Excel spreadsheets to manage important sales figures or inventory numbers? Adamek says many companies could benefit by upgrading to a more sophisticated system — something that can usually be started in-house.

6. Don’t start unsupported initiatives. Time and again, Hickey has seen companies haphazardly and half-heartedly start an initiative, only to abandon it with little to show for their efforts. “Too many companies will see any old opportunity and just throw something at it,” he says. “That’s a waste of money.”

7. Consider direct sources — or not. Many companies benefit by having direct source contracts with suppliers for their raw materials. For those that do, Adamek suggests reviewing those contracts every year to make sure they still make financial sense. Companies that use third-party sources would be wise to at least consider direct sources as an option. “There can be some real opportunity for cost savings there when they hit a certain size and scale,” he says.

8. Implement a strategic plan. Without a unified strategic plan, the management team isn’t able to focus and can slip into a chase for what Adamek calls “micro-opportunities.” The result? Loss of both cost savings and efficiency.

9. Streamline processes. “Make sure your processes are what you really need to get the job done in the best way,” Hickey says. And make sure everyone is focused on improving those processes every day. “This can hugely reduce costs,” he says.

10. Link compensation to cost-cutting goals. “If you’re going to build cost savings and efficiencies as a core tenent of your business,” Adamek says, “make sure it’s fully integrated into performance assessments.” That means finding creative ways to encourage — and reward — cost savings achieved throughout a company.

— Jon Bell


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

Managing family assets: The importance of planning ahead

News
Friday, August 22, 2014
Unknown-1BY CLIFF HOCKLEY |  OB GUEST CONTRIBUTOR

When business intersects with family, a host of  situations can arise. Without a clear vision and careful planning, hard-earned investments can become stressful burdens.


Read more...

Updated: Disrupting innovation

News
Tuesday, July 08, 2014
070814 thumb disputive-innovationBY LINDA BAKER  | OB EDITOR

The New Yorker recently published a sharply worded critique of “disruptive innovation,” one of the most widely cited theories in the business world today. The article raises questions about the descriptive value of disruption and innovation  — whether the terms are mere buzzwords or actually explain today's extraordinarily complex and fast changing business environment. 

Update: We caught up with Portland's Thomas Thurston, who shared his data driven take on the disruption controversy.


Read more...

Is this employee right?

Contributed Blogs
Wednesday, August 13, 2014
081314 thumb employeefeelingsBY TOM COX | OB BLOGGER

When I say, “Your Employee is Always Right,” I do not mean “right about the facts,” but rather “right about how they feel” and “right about how they want to be led.”


Read more...

Community colleges and sustainability

Contributed Blogs
Thursday, July 31, 2014
sustainabilityBY MARY SPILDE | OB GUEST CONTRIBUTOR

Faced with the aftermath of the “great recession,” increasing concern about the environment and dwindling family wage jobs, we have some very important choices to make about our future.


Read more...

Video: The 100 Best Survey

News
Thursday, August 28, 2014

100-best-logo-2015 500pxw-1OB Research Editor Kim Moore shares some pointers about the 100 Best Companies to Work For survey.


Read more...

Private liberal arts education: superior outcomes, competitive price

Contributed Blogs
Tuesday, August 26, 2014
0826 thumb collegemoneyBY DEBRA RINGOLD | OP-ED CONTRIBUTOR

Why has six years become an acceptable investment in public undergraduate education that over-promises and underperforms?


Read more...

Oversight? Or gaming the system?

News
Monday, July 14, 2014
AmazonBY VIVIAN MCINERNY | OB BLOGGER

Some people think Amazon’s winking eye logo is starting to look like a hoodwink.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS