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The Importance of Strategic Cost Cutting

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
When the recession first hit more than four years ago, the first reaction of many CEOs and CFOs was to cut costs to help keep their businesses afloat. In the process, many companies streamlined their operations, tightened their procedures and learned how to do more with less, thus creating leaner and more efficient organizations.

Unfortunately, some companies implemented cost-cutting initiatives haphazardly that didn’t take into account potentially damaging long-term impacts. Undisciplined, across-the-board cost cutting can severely damage a company’s foundation and undercut its strategic advantages, limiting its ability to take advantage of new opportunities to add market share and boost profits during an economic rebound.

In contrast to a "slash and burn" cost-cutting approach, this article includes ideas and approaches on strategic cost cutting in areas like operational efficiencies, overhead, ideas from employees, supplier involvement, marketing, and employee headcounts.

With the economic recovery still sputtering along in fits and starts, many Los Angeles and Southern California CEOs and CFOs remain focused on cost cutting. It may be advantageous to talk with a provider of outsourced CFO services, as a resource of this nature has many years of experience viewing cost reductions from a high-level, strategic perspective and frequently has experience in those executives’ industries.

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