The market correction and fear of a recession have forced companies to make decisions they should have been making all along. Now is the opportunity to reinvent businesses to endure. Here are a few tips to help you drive efficiency and focus on business fundamentals.
Identify Committed and Mandatory Costs
Bucket costs into a matrix with committed vs. non-committed on one axis and mandatory vs. discretionary on another. This will help you assess your ability to lean out and execute zero-based budgeting or restructuring planning.
Understanding committed and mandatory costs is crucial to driving efficiency and focusing on business fundamentals.”
Michael Gonzalez, CEO Trace
Take Control and Get Visibility: Implement necessary controls and processes to manage the finances effectively. In a growth at all costs environment, some finance teams may not have had the support to do so, but it is crucial to have visibility.
Demand Budget Management and Efficient Resource Allocation
Every person, purchase, and project needs to be justified, prioritized, and monitored
- Create company-wide and department-specific decision-making frameworks
- Ask critical questions and help optimize decisions.
Invest Wisely
Investing wisely, even in uncertain times, can lead to long-term success for your business.”
If your business is doing well, continue to invest in high ROI activities but reset expectations internally that the investment hurdle rate has been raised. Monitor growth channels closely, fund R&D with clear paybacks, and invest in internal projects to drive efficiency and retain employees and customers.
By implementing these processes and frameworks, you can set the foundation for driving results for years to come.
