Since 2008, I have seen many companies fall into the vicious circle of cost-cutting. In fact, a company to increase its profitability, it has two possibilities.
Either it will try to increase its sales or it will try to work on its costs. In times of crisis, many companies have had no choice but to work on their costs. That makes sense. What happens is that, over the years, we can reach a situation where the company will fall into the vicious circle of cost cutting. The vicious circle of cost cutting will have two impacts.
The first is on the staff. Their motivation, their productivity and then the profitability of your company will deteriorate.
The second impact will be on your products and services. On their quality. It will impact your customer base and again we will impact the revenues and profitability of the company.
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Be very careful how you implement your cost-cutting plans. Once you've determined how much money you need to invest and refinance your growth. This is really what your funds should be used for to avoid falling into the vicious circle of Cost-Cutting.
Also remember to inform all your collaborators about your intentions because it is a challenge that you will have to face together.
In the next episode, I will talk about the Maverick Buying or how to limit all the small expenses that are not budgeted for.
The Cost-Killer Minute is a series of 7 episodes to help you optimize your costs and create value in your company:
Lesson 1: The job of Cost Killer
Lesson 2: Pareto, your best ally
Lesson 3: The vicious circle of Cost-cutting
Lesson 4: The Maverick Buying
Lesson 5: The decision tree
Lesson 6: The goose with the golden eggs
Lesson 7: Champagne for everyone!