A study commissioned by the Expense Reduction Analysts’ Centre in the UK in September 2009 polled more than 1,300 board directors and senior managers. The participants said their organizations had not employed any cost reduction programs for business expenditures in the past six months.
Furthermore, nearly half (46%) had not conducted any contract renegotiations with suppliers in the past year, and more than half of respondents (56%) felt they could achieve cost savings of 6% or more for their businesses. All of this exactly when the economy was starting to decline.
Other Findings:
- 33% of respondents had measured cost reduction achievements.
- 33% had benchmarked supplier costs in the past 12 months.
- Less than 1 in 10 were very satisfied with their organization’s efforts to reduce business expenditures.
- 39% said a lack of time was the biggest barrier.
The prime focus for companies in this study is the top line – with 57% of respondents stating increasing sales as the priority for increasing profitability. However, the study highlights that there is also a major opportunity to increase the bottom line by reviewing and taking action on day-to-day business expenditures, which, in many cases, has gone unchecked for a long time.
This begs the question: Is your business costing you? Grow your top line revenue or reduce headcount. Both are viable options, but reducing your business expenditures is the fastest way to improve your bottom line.
