Tuesday, November 18, 2008

How to Reduce Costs and Increase Your Flexibility

If you’re thinking about reducing costs right now, you certainly aren’t alone.

Unfortunately, cutting back is a necessity for many companies these days. But blind, blanket spending freezes or reductions aren’t good for business (at least not if you plan to make it out of this downturn in any position to compete).

Maybe it’s time for a more thoughtful analysis, particularly if any of your fixed costs can be converted to flexible expenditures.

In this downer of an economy, fixed costs like overhead really put the squeeze on your cash flow and your bottom line. Cutting these costs can be painful both emotionally and physically, maybe even dangerous. Flexible costs, on the other hand, easily can be turned on or off or in between.

It’s in your best interests right now to have as many costs as possible fall into the latter category. And the quickest way to do that? Outsourcing.

I’m sure you’ve already heard the whole argument for outsourcing non-core competencies, so no need to rehash it here. But at a minimum, I should point out that there’s more to it than simply reducing your overhead (which is pretty good by itself).

With the right outsource partner, you also gain access to broad, deep expertise, experience and perspective (as well as productive capacity) that you’d simply never be able to sustain in house. And you get those benefits without shouldering extra overhead burden.

At Scheibel Halaska, for example, we’re members of IPREX, one of the world’s largest networks of independent public relations agencies. Our IPREX partners provide global cultural knowledge and communications expertise—but only when our clients need it. So we don’t have to employ experts on the Chinese, European or Latin American markets whom we only need for certain programs. You can read more about our IPREX relationship in a previous post.

Your business may be able to unload fixed costs by outsourcing marketing, IT, HR systems or something else. Just make sure you do your homework, of course, to find the right partner. In the short run, it just might help you accomplish your goals while still keeping your CFO happy. And in the long run, it just might become your secret weapon.

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