How you can reduce cost but not limit growth in the new year

How you can reduce cost but not limit growth in the new year

A big challenge facing many CEO’s for next year will be how to reduce costs but not limit growth. Growth typically means maximising shareholder value and that means growing the business through increased sales, revenues, margins and profits. However each one of these ‘growth factors’ comes with an ever increasing cost base. With more sales generated there needs to be more heads in the back office to service customers. The result can be as new business volumes increase so do unit costs. Margins, revenues and profits all decline as the back office continues to expand. The challenge that quickly becomes apparent is how to grow the business but also control and reduce costs.

Operations are key to growth

The back office is not a direct driver of growth and as such is often overlooked. However, operations fundamentally underpin growth and are an important facilitator. It’s the back office that delivers on new business generated by sales and marketing and is the key to exceptional customer experience and competitive advantage.

Growth is never by mere chance; it is the result of forces working together.

James Cash Penney
Atom

The combustion comparison

All engines run on fuel and historically performance output has been limited by engine size, to get more output meant getting a bigger engine. However modern engines with the latest technology are now smaller, more powerful and more efficient producing more output and better performance than ever before.

Back Office Engine

A back office is no different. With modern workforce management and back office optimisation software technology, there is no need to increase the size of the operational engine. Productivity, efficiency and performance are all significantly improved whilst cost is lowered through people and process optimisation.

Aligning growth with operations

Understanding if an operation can handle growth is essential to ensure costs can be controlled and consistently reduced through optimisation. Forecasting is commonplace in sales and marketing but it often missed in operations. By aligning sales with operations forecasts it quickly becomes apparent whether there is capacity and sufficient resource for the back office to handle new business volumes.

  • Does work volume fluctuate wildly yet resource copes with the peaks and troughs – does work expand to fill the day
  • Do managers give the continued excuse regarding sales volumes
  • is there a range of productivity performance in the teams
  • does lost time match high demand days of the month

The great growling engine of change – technology.

Alvin Toffler
Virtual technology in business

Sustainable growth

Workforce management and back optimisation software provides a major upgrade to any operational engine but there are many other ways to increase performance. The people in an operation are essential to its efficiency and performance. With the right culture, the right frameworks and the right objectives, supported by effective software the people in the operation can improve the efficiency of the engine every day with thousands of incremental changes.

To drive growth, operations have to have the flexibility and capacity to handle increased in new business. Three months into a new sales plan, no CEO wants to discover they needs to increase their operations cost base because they can’t service new business volumes. It’s essential to have a deep understanding of existing operational capabilities and ensure they are aligned with growth forecasts to achieve objectives and ensure that sustainable growth is without increasing cost base is viable.