Managers: How to cut costs

The following is an excerpt from Tom Armstrong’s Cut Costs Now: Tips to save money during tough times downloadable manual—ed.

You and your organization are always interested in controlling costs, of course, because it’s good business practice. Today, however, that desire is likely to be stronger than ever.

Controlling costs is not only good business—it’s vital to remaining profitable. However, things aren’t so simple. Ideally, you’d like to cut costs and maintain or even increase productivity—while retaining your best employees. That’s quite a challenge.

To get started, consider the ideas below for preparing to cut costs.

1. Know where the money goes

Determine the amount your group spends in each area—and exactly what you spend it on. Then determine whether making cuts here will have a significant effect on your costs. Is it a large amount in itself ? Is it a large percentage of your budget?

If you’ve been assigned to reduce your costs by a certain amount, how far would each reduction take you toward that goal? To be sure, focus on the major reductions that will do your group the most good in the least time. However, don’t overlook the value of a steady series of smaller cost reductions that will add up over time.