Growth versus Expense Reductions

April 2, 2007

In the 80’s and 90’s the mantra was expense reductions for companies of all sizes.  That was the way to improve the bottom line.  Those companies that were successful in reducing their expenses did well in the short term.  I emphasise short term!   You cannot be successful in the long term by simply getting expenses in line.   You MUST grow the top line to truly be successful. 

Of course, growing your top line is much harder then cutting expenses.  You must find a way to revitalize existing businesses, find new growth opportunities and explore mergers and acquisitions.  This is hard work!  It is always much easier simply to fire people, close plants or take other measures to cut  expenses.  Yet, if you follow a disciplined approach to growth it reduces complexity and increases your odds for success!

So, how do you approach growth?  It requires a complete analysis of your Company’s strengths and weaknesses, the same for your key competitors, and a customer based needs analysis.  Thus, where need is greatest and your company has strengths and your competition is weak, you will find the best opportunities.  Of course this is the area that needs complete objectivity and a thorough vetting.  That’s where the hard work lies!

Rich

Bizvice:  Business Strategy, Marketing & Entrepreneurship

Advertisements

One Response to “Growth versus Expense Reductions”

  1. patmcgraw Says:

    Great piece…unfortunately business ‘leaders’ are rewarded for short term, quick fixes that allow Wall Street to sleep easier (and richer) while the company never really achieves its full potential.

    I recently went through this with a privately-held client and the discussion over what the market needed and how they perceived us was incredibly eye opening (no one had thought to do market research while business was good).

    From there we identified perception gaps as well as gaps between audience needs and our capabilities/product offering.

    The perception gaps were quickly addressed in new messaging in promotional materials as well as through staff conversations with customers. Within a few months, our audience knew we had certain things they needed.

    Meanwhile, existing products were enhanced and new products developed in order to address product gaps. That was a longer cycle but we communicated our vision and process to the audience so they were involved in creating the new products and aware the products were coming.

    On the third track, we wanted to get ahead of the curve so we created a task force that was responsible for charting where the industry and market was going over the next 5-10 years.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: