Whether you work for a small, independently-owned company or you manage a Fortune 500 corporation, every CEO’s goal is to grow their business. And there are a lot of ways you can do this. You can work to improve your own individual efficiency, you can optimize processes so as to help your team be more productive, you can target new markets and much more.
But one growth strategy many CEOs overlook is cost-cutting. This is because too many of us, cost-cutting symbolizes getting smaller. It’s something we do to manage overhead, or to inflate profit margins. Yet if you’re smart about how you cut your costs, which includes automating and outsourcing all the right things, then you can actually use these savings as a way of supercharging company growth.
Here’s a little bit about how reducing your expenses can actually help your company expand.
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Reinvest in Growth Areas
It’s important to make a distinction between income producing and non-income producing and non-income producing activities. Many non-income producing activities are necessary, but the goal should always be to minimize the expense of these activities, since every penny you spend on them is more or less lost, meaning it won’t produce any direct returns.
But if you really want to get your company growing, then what you need to do is take the money you’ve saved from your non-income producing activities and apply it to your income-producing ones. For example, if you can save money by outsourcing/automating payroll and other HR functions, or by finding a new broadband internet provider, then you can take these savings and use them to fund a marketing campaign, or to redo your website so that it’s more user-friendly and better at driving sales.
In this sense, you cost-reducing efforts impact the success of your business in two ways: they help you reduce overhead and increase margins, but they also allow you to add fuel to your growth fire, making it that much easier to push the company forward.
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Offer Employee Incentives
One of the ways to get the company growing is to convince employees to work harder, largely because the only real way to grow is to increase productivity. But not everyone is going to jump at the idea of working harder, especially if they have other things going on in their lives. Yet if you can answer this by offering some nice incentives for boosting productivity, then you might have a winning formula for getting people to push themselves a bit harder.
However, this is really only going to be successful if you can find ways to offer these incentives without increasing overhead. And the best way to do this is to try and cut down on how much it costs to carry out your non-income producing activities.
It’s important to note that you may want to consider structuring these incentive programs in non-traditional ways. For example, instead of just offering monetary bonuses, you could invest in worker wellness programs, especially since we know that healthy employees are more productive. Or you could use this money to help build up company culture, since this is something that helps people tap into their intrinsic motivation and work above and beyond what’s expected of them.
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Do Things Faster and Make Customers Happier
Another way that cost-cutting can help you improve growth is by using it to deliver a better customer experience. These days, people are tremendously concerned with how a company treats them. Being able to tend to someone’s needs quickly and effectively is going to make them happy. And when they are happy, they tell their friends, which makes it easier for you to reach new people and expand your market.
A good example of this is in customer service itself. Integrated and automated systems can make it much easier for you to track tickets and also identify recurring issues, and this allows you to put in solutions that are proactive instead of reactive. And while some of these automated systems may be a bit expensive to install and roll out, the savings they provide over time are tough to beat. And when this translates into faster and more effective customer service, then you can also expect it to translate into happier and more plentiful customers.
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Make Smart Choices
Using cost savings as a way of boosting growth only works if you make smart choices. For example, don’t make cuts that are going to significantly increase someone’s (or some department’s) workload, as all this will do is overload people and make them less productive. Instead, focus on automation and outsourcing, as these are easy ways to save that will give you more money to put into areas of the business that generate growth and profit.
About the Author: Kevin is the founder of Vast Bridges, a customer acquisition and lead generation service. He is passionate about helping businesses develop and implement a strategic vision, something he has done for countless clients over the years.