Being Cost Conscious, But Not Obsessive

Cost Consciousness Is the Starting Point. Saving on costs has so many benefits to the business owner, including:

·      Maintaining a healthy financial position, conserving cash for other needs

·      Facilitating informed, strategically sound financial decisions

·      Providing a competitive advantage, given you can provide a more compelling value proposition to your customers

·      Allowing more flexibility and adaptability across the spectrum

·      Creating a more efficient, streamlined company

But Don’t Cut Too Close to the Bone. Obsessiveness around cost cutting can sometimes lead one to go too far, leading to:

·      Sacrificing product quality

·      Undermining the customer experience

·      Stifling innovation and growth

·      Negatively impacting team morale and productivity

·      Losing key employees

·      Compromising safety and compliance

·      Vulnerability to supply chain forces

·      Overlooking revenue opportunities

Suggested Spend Analysis

·      Is there a clear business need for the spend that is aligned with our goals and strategy?

·      Can we afford it?

·      Is there a less expensive way to accomplish the goal?

·      Does it have a positive ROI that outweighs the risk?

·      Does it involve risks and can they be mitigated or tolerated?

Create the Cost Culture You Want. You will benefit greatly by a clearly articulated cost culture that is 100% aligned with your values and objectives around costs. Make the desired philosophy and behavior around costs known to all and provide incentives that reinforce them.

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

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