SPECIALFEATURE
Of course it’s not simply a question of observing austerity measures all round. Any company is only ‘in’ business so long as it is involved in expenditure and transactions. Getting value for money, therefore, is also key. Alex Bunten agrees: “The old saying ‘you have to speculate to accumulate’ still has some merit – you can’t just stop spending and hope that your custom will continue to come to you without investing. However, the days of above- the-line spending, especially in marketing on general brand awareness are dwindling. It’s now about measuring the return on investment and getting the most for your money. Make every pound work for you.”
Culture works its way through the organisation and before they know it, the company is an organisation that believes in added value at all levels
“
Ensuring good value for what you spend and pursuing cost-savings are not necessarily mutually exclusive exercises, but they do tend to evolve from different mindsets. As Robert Allison says: “‘Best value’ is fundamentally at the heart of efficient purchasing, it’s about getting the best value for money the whole time. And there is a very distinct difference there in most of our clients, we find, between a mindset for best value and one of cost cutting, and it is often driven by different motives.
”
“Getting value for money defined right up front is important; what do we expect of the supply chain in terms of quality, service, delivery and environmental considerations? In this day and age, getting those right upfront is absolutely essential, and getting the stakeholder buy-in to all of those things will help to keep those savings in the bottom line for the long term.”
Even after implementing cost-cutting and best-value analyses, the experts advise that
28 |
www.franchisornews.co.uk
companies are wary of complacency. As Norman Grossman says: “Remember, for maximum benefit, expense review needs to be a regular and ongoing process as market conditions are ever-changing. Last-minute action when cashflow is tight can be painful! If you’re thinking ‘that’s great but is it really worth the effort?’, let’s look at it from another angle – suppose your company has a gross profit margin of 25 per cent. Now suppose that as a result of bringing in a cost management specialist you save £100,000 on your essential overhead expenditure. In order to generate this additional profit through sales, you would have to increase turnover by £400,000. Try that line on your finance director on a cold autumnal Monday morning!” n
BE CAREFUL THAT YOUR BUSINESS IS NOT running you… NORMAN GROSSMAN’S TOP TIPS FOR
IMPLEMENTING COST- MANAGEMENT CHANGE
“Optimistic, yet still defensive”, those are the sentiments expressed by UK finance chiefs in management consultancy Deloitte’s CFO Survey for the first quarter of 2012. The survey shows that chief financial officers are even more focused on safeguarding strategies, including cost-reduction programmes, than they were a year ago. Thirty-eight per cent of 136 surveyed indicated that cutting costs is a top priority for 2012, compared with the 31 per cent in last year’s survey. So what is the best way to go down that route? Well, best practice rests upon knowing your costs, so the first area to look at is your Profit and Loss statement. Question every expense. Challenge every assumption. Review the expenses with painstaking detail and consider:
• Is the expense too high? Are you buying from the wrong supplier or service provider? Can you get the same service more cheaply elsewhere? Can you renegotiate?
• Are you getting good value for this expense? If you cannot get better elsewhere, are you getting good value for the investment made?
• If you can get a better offer and maintain the standard of service, move your business to the new supplier.
• If you can reduce expenditure in that area, consider the consequences. If the impact will be positive, then, you have nothing to lose. Take the required action.
• Always remember that it is not just about cutting costs, which are necessary for the business to function in an effective way. It is about ensuring that you are getting excellent value from the money you are spending.
• Maximise the return on your investment. Every time you spend money, take full advantage of the opportunity.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52