Cut Costs Not Corners: A Practical Guide to Staying Competitive and Improving Profits

Copyright Page......Page 5
Table of Contents......Page 6
List of Figures......Page 11
List of Tables......Page 12
Introduction......Page 14
Who this book is for......Page 16
Myth 1: cost cutting is for times of crisis only......Page 17
Myth 2: cost cutting is just another word for downsizing......Page 19
Fact: cost cutting is forever......Page 20
How to use this book......Page 21
The nature of cost......Page 22
Fixed costs......Page 24
Semi-variable costs......Page 25
The dynamic behaviour of costs......Page 26
The costs to be cut......Page 27
Using the ROI framework for reviewing costs......Page 29
Three more facts about costs......Page 30
Cost leadership is not the same as low price (or even low quality)......Page 31
Low costs are not a lucky accident......Page 32
The experience (or learning) curve......Page 34
Pareto’s 80/20 rule......Page 35
Cost-cutting assignment 1......Page 37
Cut cash costs, not depreciation costs......Page 39
Depreciation distorts spending plans......Page 41
Sizing up space needs......Page 42
Work out what space you need and where you need it......Page 43
Rent out spare space (and other services)......Page 44
Hot desking and teleworking......Page 45
Running the business from home......Page 47
Production methods......Page 48
Getting equipped for less......Page 50
Comparing prices......Page 51
Hi-tech for less......Page 52
Outsourcing......Page 56
Sunk costs......Page 58
That sinking feeling......Page 59
Taking the long view......Page 60
Tracking capital costs......Page 61
Cost-cutting assignment 2......Page 63
3 Kill Bill II: make working capital work......Page 65
The working-capital cycle......Page 67
Keeping stock costs down......Page 69
Economic order quantity......Page 70
Getting paid and paid faster......Page 71
Chasing debtors......Page 72
Credit cards......Page 73
Resorting to law......Page 74
Negotiate supplier discounts......Page 75
Ask for stock on consignment......Page 76
Keeping on top of working-capital costs......Page 78
Quick ratio (acid test)......Page 79
Days’ stock held......Page 80
Cost-cutting assignment 3......Page 81
4 Max up margins......Page 82
Introduce profit (ie less cost) motivation......Page 85
The dangers of rewarding sales......Page 86
Avoiding the overtime trap......Page 87
Motivate without money......Page 88
Review your products and services......Page 89
Costing to eliminate unprofitable products and services......Page 90
Strip out unnecessary product cost......Page 91
Don’t rush into discounts......Page 92
Sell to the right market segment......Page 93
Review suppliers......Page 95
Use fewer suppliers, ones who need your business......Page 96
Find lower-cost substitute materials......Page 97
Buy in bulk or online......Page 98
Negotiate better prices......Page 99
Strip out waste......Page 101
Eliminate theft and fraud......Page 102
Cost-cutting assignment 4......Page 103
5 Trim overheads......Page 104
Saving on sales and marketing......Page 105
Advertising on a shoestring: how to get seen more for less......Page 106
Choosing the media......Page 107
The internet: the CCCO’s best ally......Page 108
Public relations: advertising for free......Page 109
Selling more for less......Page 110
Internet: the universal cost cutter......Page 112
Low-cost selling online......Page 113
Other internet cost reducers......Page 114
Saving on website design......Page 115
Thrifty visibility......Page 117
Vehicle costs......Page 120
Travel on a budget......Page 121
Utilities and telecommunications......Page 122
Wages and salaries......Page 123
Go paperless......Page 126
Cost-cutting assignment 5......Page 127
6 Minimize finance and tax costs......Page 128
Gaining grants......Page 129
Winning competitions......Page 130
Borrow from family and friends......Page 131
Get better terms from banks......Page 133
Negotiating with bankers......Page 134
Putting spare cash to work......Page 135
Keeping more profit......Page 136
Value-added tax and sales tax......Page 137
Walking the thin red line......Page 138
Accountancy and audit......Page 139
Cost-cutting assignment 6......Page 140
7 Cutting costs in a crisis......Page 141
Cull headcount......Page 142
Freeze hiring......Page 143
Lower the wage bill......Page 144
Make asset savings......Page 146
Reduce financing and tax costs......Page 148
Cut and run......Page 151
Falling foul of the authorities......Page 154
Cost-cutting assignment 7......Page 155
Budget for cuts......Page 156
Forecasting......Page 157
Cost-budget principles......Page 158
Demonstrated best practice (benchmarking)......Page 159
Variance analysis......Page 160
Flexing the budget......Page 161
Seasonality and trends......Page 162
Set cost-cutting priorities......Page 163
Managing the cost-cutting process......Page 165
Cost-cutting assignment 8......Page 173
Index......Page 174