Wielding the axe
Article Date: Sep 16 2009Cuts may be a dirty word among politicians, but it’s well-known to businesspeople.
Practising the art of cost-cutting in good time has saved many a company from oblivion. Clearly the art is in what you cut, not how much, and that’s the thorny question all political parties are faced with at the moment. Just as in business, if ministers make the wrong choices they could find themselves out of a job.
Cost-cutting is no panacea, of course. As you reduce expenditure, you must be careful not to cut the quality of your offering to your customers – otherwise you will be forced to slash prices too and find your business caught in a vicious circle.
Recently, our sister magazine Business XL has been searching for fast-growing UK companies for its annual Rising Stars research (which you can read more about here). Conducting that search in a recession is, of course, easier said than done, and the final 50 businesses come from diverse regions and sectors.
One of them, London-based art dealer Alan Cristea Gallery, is run by a man who has seen three recessions before. Here’s his view on cost-cutting:
‘I’ve known quite a few people in the art world who hold out in the recession by depleting their staff and their stocks; then when the upturn comes the camel’s back finally breaks.’
According to Cristea, cost-cutting too often becomes a kind of mantra, suppressing new ideas and creativity and sapping the morale of your staff.
It’s easy to mock Gordon Brown with his claim to have ended boom and bust. But there’s a valuable lesson to take from his errors: in business as in government, you need to exercise restraint in the good years so you can flourish in the bad ones.
A very good and cutting article!
Charlotte Abbot
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