Quite a few years of experience and consulting to many businesses large and small has shown me a very common thread and that is company directors find it difficult to approach cost-cutting in a logical and strategic way.
This is where an independent external consultant is more able to act as a change catalyst to identify and implement an effective, sustainable cost revue program.
An independent, experienced and ‘been there – done that’ consultant is able to carry out the critical element of survival, revenue and income including restructure so that the directors can focus on maintaining the goodwill of the business with clients, employees, and all key stakeholders.
In a project of recovery for any business it is just not solely around the cutting known expenses or going for the ‘Quick Overhead Fix’ by lopping heads and losing valuable experience and maturity within the business. I have found that a lot of accountants immediately resort to this mechanism without fully understanding what is needed to make up a sustainable growth and bottom line.
Yes, it is true that all positions must be reviewed and how each one adds value to the business. Does each person have a job description with a balance of responsibility, accountability, and authority to manage/perform in line with mutually agreed KPI’s?
When entering a strategic review process I always insist that part of this must be supported by an effective communication policy where all key stakeholders feel they have been an integral part of the development process along with a strong sense of ownership of the program.
I also encourage the business to look at and renegotiate areas of expense which cover rent, outsource of ‘non-core’ items, supplier cost-downs, sale of surplus assets, and as a supplier look at reducing the dependence on any one client to no more than 40% of total revenue.
Staff also need to be trained in cash flow, and budgets, with daily measurement of actual performances against forecasts where there are no adverse surprises at the end of an operating month.
I have been astounded by the number of businesses with potential to lead Australia who have just lost sight of the basic operational management needs to achieve sustainable growth in sales and profit. Usually they are all suffering from the same lack of controls and organisational development.