1Classification
Costs and their owners: what holds up revenue, what holds up obligations, what does neither.
Cost Optimization
Cut what's unnecessary without breaking the system. We separate the costs that hold up revenue and obligations from historical habits.
Sound familiar?Costs are growing faster than results, Cuts are made equally across all departments, It's unclear which costs are critical
Finance and Economics
How we work
1
2Link to results
Which costs have an effect and what risk cutting them carries.
3Measures
Quick and structural, in order of reversibility.
4Control
How the savings are locked in so they don't creep back six months later.
Sound familiar?
- Costs are growing faster than results.
- Cuts are made equally across all departments.
- It's unclear which costs are critical.
What usually lies behind it
Cutting equally across all departments hits both the unnecessary and what brings in money. Marketing is usually cut first, and a few months later the drop in revenue eats the savings. Cuts should follow the link to results and reversibility.
What you get
A map of costs with owners and their link to results.
A plan of measures with the calculated effect and risk.
Rules for control after the changes.
The cost of waiting
If nothing changes
- 01
Costs will be cut in a rush.
- 02
Functions that bring in money will suffer.
- 03
The savings won't stick.
When you don't need this service
- A cash gap has already happened. Then you need a crisis sequence, where cutting is the second step.
- The problem is revenue. Customer economics and sales come first.
How to tell it worked
Savings after six months
whether they held.
Revenue
whether it fell after the cuts.
Cost owners
every line has a person responsible for it.
Questions
Will there be layoffs?
Decisions about people come last: they're irreversible and rehiring is expensive. Costs that don't affect revenue come first.
How much can we save?
We'll say after the classification. Promising a percentage in advance means cutting blind.
Should we cut marketing?
Cutting a channel that pays back is dangerous. One that doesn't pay back goes first.
Related
Services: Profitability Analysis · Crisis Management · Financial Model Materials: Crisis: the first 30 days · The cost of doing nothing
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