UK: SME/PROFESSIONAL COUNSEL.

FOCUS ON FAT NOT MUSCLE. Knowing which costs to cut and which to leave alone is the key.

It is often the knee-jerk reaction of small businesses to cut costs as soon as demand slackens but this is usually the worst thing they can do. Too many cut costs with no regard to the knock-on effect to their customers or products. Instead, managers need to focus on those costs that do not add value to their client relationships. They should set minimum cost-reduction targets and agree a timescale.