overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. T

Unless they have an understanding bank or creditor, rigorous cost cutting may be needful for some companies to survive especially during a cash flow crisis. Cutting costs to achieve a turnaround may save the business, but it always leaves behind a demoralised workforce with an acute problem of rebuilding confidence and motivation. Often the key question is whether the company is able to make a come back with its existing management intact.

Many small and medium size enterprises (SMEs) cannot embark on large-scale costcutting measures such as massive retrenchment or large asset disposal to raise cash quickly. The SMEs have difficulty in retaining their staff and do not have a lot of assets to sell off. They may also encounter difficulty to obtaining credit lines from their bankers and creditors. Hence, they have to exercise great care in cutting the costs without injuring the muscles and the organs as any miscalculations can be fatal.

One of Unilever’s subsidiaries, a Dutch meat, sauce and soup business was in deep trouble. Among other challenges, it faced two major problems of shrinking market and a tired organisation. A new chairman was hired to fix the mess. He swiftly acted by replacing those directors who lack the business acumen and enthusiasm to foster business growth. He persuaded sceptical workers to embrace growth and challenges as the new buzzwords.

A group of younger managers were selected as the team leaders to spearhead new direction for future growth. They created new products and carve out new markets as well as significantly improve production and margins. In addition to growing the existing brands, they were able to strengthen relationships with its retailers and consumers. In all, it took the company five years to rebuild its business and subsequently, it was able to achieve annual double-digit growth.

Management must be diligent and well organised in order to identify any unnecessary expenditures that can be trimmed. These may include magazine subscriptions as nowadays information is readily available on Internet. Telephone and power bills can be trimmed by bidding service providers for lower rates. Furthermore, service contracts are normally not worth the money except for copier service contracts as photocopiers break down frequently. Advertising costs can be reduced by sourcing for the most effective medium and eliminating the advertisements with low responses. Cut back can also be made on entertainments, donations to charity and other worthwhile causes. In turnaround situation even charity has to have a return on investment. Only buy office supplies that are presently needed and cost savings are realised by making purchases that are on sale.

To further tighten stationery supplies, it is good to assign a staff to be in charge of the supply closet. Any person must duly sign for any requisitions. Costly overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. Th

also encounter difficulty to obtaining credit lines from their bankers and creditors. Hence, they have to exercise great care in cutting the costs without injuring the muscles and the organs as any miscalculations can be fatal.

One of Unilever’s subsidiaries, a Dutch meat, sauce and soup business was in deep trouble. Among other challenges, it faced two major problems of shrinking market and a tired organisation. A new chairman was hired to fix the mess. He swiftly acted by replacing those directors who lack the business acumen and enthusiasm to foster business growth. He persuaded sceptical workers to embrace growth and challenges as the new buzzwords.

A group of younger managers were selected as the team leaders to spearhead new direction for future growth. They created new products and carve out new markets as well as significantly improve production and margins. In addition to growing the existing brands, they were able to strengthen relationships with its retailers and consumers. In all, it took the company five years to rebuild its business and subsequently, it was able to achieve annual double-digit growth.

Management must be diligent and well organised in order to identify any unnecessary expenditures that can be trimmed. These may include magazine subscriptions as nowadays information is readily available on Internet. Telephone and power bills can be trimmed by bidding service providers for lower rates. Furthermore, service contracts are normally not worth the money except for copier service contracts as photocopiers break down frequently. Advertising costs can be reduced by sourcing for the most effective medium and eliminating the advertisements with low responses. Cut back can also be made on entertainments, donations to charity and other worthwhile causes. In turnaround situation even charity has to have a return on investment. Only buy office supplies that are presently needed and cost savings are realised by making purchases that are on sale.

To further tighten stationery supplies, it is good to assign a staff to be in charge of the supply closet. Any person must duly sign for any requisitions. Costly overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. T

m leaders to spearhead new direction for future growth. They created new products and carve out new markets as well as significantly improve production and margins. In addition to growing the existing brands, they were able to strengthen relationships with its retailers and consumers. In all, it took the company five years to rebuild its business and subsequently, it was able to achieve annual double-digit growth.

Management must be diligent and well organised in order to identify any unnecessary expenditures that can be trimmed. These may include magazine subscriptions as nowadays information is readily available on Internet. Telephone and power bills can be trimmed by bidding service providers for lower rates. Furthermore, service contracts are normally not worth the money except for copier service contracts as photocopiers break down frequently. Advertising costs can be reduced by sourcing for the most effective medium and eliminating the advertisements with low responses. Cut back can also be made on entertainments, donations to charity and other worthwhile causes. In turnaround situation even charity has to have a return on investment. Only buy office supplies that are presently needed and cost savings are realised by making purchases that are on sale.

To further tighten stationery supplies, it is good to assign a staff to be in charge of the supply closet. Any person must duly sign for any requisitions. Costly overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. T

s. Furthermore, service contracts are normally not worth the money except for copier service contracts as photocopiers break down frequently. Advertising costs can be reduced by sourcing for the most effective medium and eliminating the advertisements with low responses. Cut back can also be made on entertainments, donations to charity and other worthwhile causes. In turnaround situation even charity has to have a return on investment. Only buy office supplies that are presently needed and cost savings are realised by making purchases that are on sale.

To further tighten stationery supplies, it is good to assign a staff to be in charge of the supply closet. Any person must duly sign for any requisitions. Costly overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. T

overseas trips can

be replaced by videoconferences with overseas subsidiaries. Reduce insurance expenses as during very critical period, survival is more important. Reduce professional fees and banking/financial charges.

Downsizing, delayering, outsourcing and business process re-engineering are common prescriptions for cutting fats. But these treatments are only part of the answer. As staff costs usually form a significant portion of the company’s expenditure, it is an obvious place to look for fats. It is important to involve the staff in cost-cutting exercises as they are the ones who know where to locate these fat reserves. The people in the organisation are the producers of business fats or muscles. The activities that people perform and how well they perform them determine the firm’s success. Also, it is imperative to instill and preserve the right mindset of cost prevention and cost elimination among the employees after the cost-cutting exercises. The company must not lose out in the long term because of the complacency of the staff.

Many publicly listed companies are infected by the virus of the “quarterlies” performance. The need to show good financial results for every quarter may have become unrealistic. This virus causes companies to forego the long-term business growth for the sake of meeting unrealistic quarterly objectives. This virus can cause cut back on R&D and new product development as well as advertising and promotion expenditures, which may deprive these companies of the vital fuel for the future expansion.

Some troubled manufacturing companies may attempt to short change long-term gains for short-term benefits. These short sighted companies may cut back on maintenance or even use the parts from unused equipment as spare parts for other machines. Such shoddy approaches to managing the business is compromising the future prospects as vital muscles and the organs are being cut off, depriving the body of an opportunity to regain strength and energy.