A recent report in the Australian Financial Review, with the headline of ‘KPMG to cut 200 staff, slash partner pay by up to 17pc’ stated:
The professional services sector has been hit hard as large companies including bank NAB and airlines Virgin and Qantas slash their consulting spend. Spending on many types of advisory work is classed as a discretionary “third-party” cost at many corporates.”
Spending on… advisory work is classed as a discretionary cost
Wow! Makes you wonder what these consultants were working on that doesn’t really matter anymore.
But that article was referring to large corporates. Big companies with big budgets.
SME’s should be careful they don’t jettison professional help when they need it most
It’s easy to try and “save” money by reducing expenditure on things that you’re not seeing an immediate impact from. In one way that makes perfect sense. You need to save money NOW.
But the flipside is you’re gambling on the future of your business. If the initiatives you have underway, which external specialists are helping you with, have a direct bearing on the performance of your business then you should be very reluctant to reduce expenditure on those.
But sometimes cash today is the priority, not performance tomorrow
Yes, it’s understood that cash flow can drive short term decisions. But the key is to make sure you, as a business owner or business leader, don’t automatically cut costs on activities that could actually give you the edge you need to keep your company ahead of competitors.
The work we do at Vectis is always focused on performance improvement for the clients business
Sometimes these improvements take a while to achieve because there are steps to take, foundations to build, and skills to develop. The danger is that if you postpone doing all those things you also lose the advantage (or positive benefits to the business) that were the goal of those improvements.
What’s the answer?
Ironically, the answer could be to get professional advice or guidance on decisions to cut back any improvement programs you have in place. Those performance-improvement initiatives may include:
- Process improvements
- Technology upgrades
- Automation of systems
- Product development
Apart from simply cutting out the improvement initiative other options may be:
- Do a deeper assessment of all expenditure to ensure the best decision is being made
- Seek alternate payment plans or billing cycles from your advisors
- Restructure the work being done by your advisors to work within your new priorities yet still maintain some progress
Where do you want to be afterwards?
Sure, sometimes you just have to cut costs to survive.
But often the smarter approach is to first assess where you want to be after the present critical situation has passed, and make any decisions about expenditure based on that (potentially new) destination.
Request a confidential discussion
For a confidential discussion about your options during these troubling times you’re most welcome to contact us for a confidential, obligation free discussion, at no cost.