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Cutting costs to keep value

Economic news makes for grim reading these days, and we have entered a new era of corporate austerity. Cost-cutting has become a major focus and belts are being tightened across the board.


For those charged with slashing expenditure it is tempting to simply rush around rationing the stationery, instituting redundancies and slashing the IT order. But perspective is essential and it must be value, not price, that provides the impetus for any successful reduction in costs. You need a long-term strategy that accounts for the implications of cuts on the overall health of the business, and it’s the low-value areas that must be addressed as a priority, not necessarily the high-cost ones.

There’s a logical set of steps to follow, from low-ticket budget items all the way through the potential restructuring programmes. So instead of jumping straight in, it pays to take a more measured approach and start at the shallow end.

Step one

It’s easy to dismiss the seemingly small change – that tied up in discretionary spend. But a taxi fare here and a client lunch there soon add up. In fact, travel and entertainment (T&E) expenses are estimated to be a company’s second largest controllable outgoing after salaries, and there is often some room for tightening up.


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