Strategic Cost-Cutting: How to Improve Profitability in a Downturn by Jason Schenker

Author:Jason Schenker [Schenker, Jason]
Language: eng
Format: epub
Publisher: Prestige Professional Publishing, LLC
Published: 2020-04-17T20:00:00+00:00

In short, some business basics as well as some of the greatest perks seen in startup life culture could become antiquated trappings of a far-too-luxe period of time.

In addition to lowering costs, these use reductions can also help companies meet increased pressures for ESG and sustainability goals.

Plus, remote workers may be able to afford a significantly higher quality of life without needing to live close to an office in an expensive area.

If you never have to go to an office in Manhattan or Silicon Valley, you can get a high wage and still live far out in the country.

The only thing that matters is your access to the internet, a computer, and a phone.

For companies, this also presents a financial advantage. After all, if you make Manhattan profits but can pay your people wages that are competitive for Boise or Milwaukee, you may be able to reduce your labor costs significantly while keeping your profits high.

Other Cost Implications

While reducing physical overhead in terms of office space is critical for businesses like mine, the importance of reducing square footage needs for any kind of company can also deliver significant financial value.

In the wake of recent disruptions, retail space demand could also fall — even if warehouse and distribution center square footage demand is poised to rise.

The truth is that the highest-cost square footage, especially in heavily dense urban areas, could experience a decline in demand.

Beyond Square Footage

One way that I’ve repeatedly highlighted some companies gain leverage in their day-to-day operations is to use technology to control other costs wherever possible.

One important example of this is the use of vending machines for PPE cost-savings programs. Not only does this reduce some MRO square footage, but it also helps track the use of MRO and PPE equipment. These are goods that are notoriously difficult to track—and they often grow legs.

Being judicious in overhead can greatly improve company profitability. After all, every dollar in spending that gets cut goes right to the bottom line. This means that cutting costs can actually boost profit more than increasing sales.

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