Almost everybody that reads this blog, and their uncle and their dog have told me that my last few posts were tepid sermons. And that they would rather have me return to my obscenity spouting bitter ranting ways than spew insipid advice.
Now even though all those people total to a meager number of 2 (the reader has a dog for his uncle), it is advice I will take. When I can.
If you read my last post - I was away for starting up my business. That's done. We're off the ground. So I'll be back posting semi regularly.
All right. Back to mindless ranting.
So the economy has been in the toilet for a while.
Companies are cutting jobs all over the place.
And as you waste your time at work carousing through this blog, your manager is probably closeted in a conference room with other weasels and ferrets trying to figure out how they can cut costs. They're going to go through the silly ideas of removing the coffee from the break room and the small sandwiches from the meetings before they get down to the real business of getting rid of the structural problems that cause higher costs.
So how should anybody reduce their costs?
The cost to run your business is made up of some very basic areas. I simplify, but it boils down to:
Material: Money for material that your product is made up of (plastic, steel, bullshit, whatever)
Labor: Money for people that shape your plastic, steel, bullshit, whatever into something customers will swallow
Sales & Marketing: Money for people that will shove the shaped plastic, steel, bullshit, whatever into the customers throats
Research: Money to figure our what shape of plastic, steel, bullshit, whatever is easiest for the customer to swallow next year
G&A: The money for those clueless ego masturbating monkeys otherwise known as managers
So here's how you really reduce cost, instead of dancing around the coffee machine hoping for a reduction in paper cups.
Material: Reduce your material cost as a percentage of your revenue. Renegotiating with suppliers should be done, but not counted in the saving.
Labor: Cut it to 10% lower than the levels that your next quarters forecast requires. Don't pussyfoot around this. Pay cuts and forced vacations is the same as pussyfooting. . If your company does this, then it's being a pussy. And if your manager tells you they're doing it to save jobs or to be nice to employees, they're not just being pussies, they're liars as well.
Research: Do you even know how your research and development funds are spent? Really? Look again. It's not about cutting the spend. It's about making sure you're spending it in the right places. It's probably not a bad move to ask a new guy to take it over - or at least start managing the R&D finance portion (if your company is organized that way)
S&M: This is the touchiest. You gotta figure out which spend works and which doesn't. No point throwing parties for customers and their wives. That's not going to buy you anything. But creative pricing, packaging, etc - go for it.
Management: Knock out every overpaid management flunky you got. Every last one of them. Your management staff should be cut to the same % that the labor was cut if not more. And every CEO if a company that can not beat the market in a bad economy is a bad CEO. I've had enough of these management bullshit artists that blame the economy when things are bad, and take the credit when the going is good. Can't beat the market over a two year period? Fire the fucker.
Now I know that none of the readers of this blog are in position to make the decisions I'm recommending. But if you've got balls go tell your manager what he needs to do.
Or stop reading this blog.
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