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Cut Costs Not Corners
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Cut Costs Not Corners

A Practical Guide to Staying Competitive and Improving Profits

Colin Barrow
Kogan Page, 2010
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In today’s distressed economy, every firm is, perforce, a cost cutter. Your company can achieve lean operations by not overpaying for supplies, lessening employee overtime and getting full value from all expenditures. But beware: Severe downsizing can be hugely counterproductive and might cause serious harm to your business while trashing its competitive position. Business professor Colin Barrow reveals the most effective ways to cut costs and outlines proven practices, tips and techniques to reduce expenditures in every area of your organization. His numerous real-life case studies underscore the imperative of making cost cutting a consistent concern. getAbstract recommends Barrow’s helpful, albeit basic, primer to first-time entrepreneurs and small-business owners who need a lucid, straightforward guide to tackling costs.

Summary

Cutting Costs – How Google Did It

In 2009, while other technology firms struggled financially, Google’s earnings increased by 19%. What accounted for this sharp rise? While sales revenue grew by 3%, Google derived the majority of its improved results from stringent cost-cutting measures. For example, Google’s food service unit reduced its hours, and the company dissuaded employees from taking home the free meals they received at work. Google also disposed of bottled water, afternoon tea and various other employee perks. In total, the firm effectively cut capital expenditures by 80%. Google effectively disproved two myths surrounding cost cutting:

  • “Cost cutting is for times of crisis only” – False. Cost cutting should be “a permanent management process.” Often, once an emergency has passed, companies revert back to their free-spending ways. For example, companies typically pay too much for acquisitions in rising markets. In “the biggest, and certainly the worst, banking takeover in history,” Royal Bank of Scotland (RBS) led a consortium in July 2007 to acquire ABN AMRO, a Dutch bank, for approximately €70 billion [$97 billion] – a massive €9 billion...

About the Author

Colin Barrow is a visiting professor at numerous business schools. He is the author of The Thirty-Day MBA and The Business Plan Workbook.

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