7 Strategies For Breakthrough Cost Reductions For Business Survival in Tough Times

These days the economy has made it hard for many companies to survive. Tried and true cost reduction methods such as reducing headcounts and renegotiating contracts certainly help, but at this point, it may not be enough to achieve significant improvement on the bottom line.

Unfortunately, small reductions will not save most companies from the crashing economy, and the only options are to either watch your business run out of money, or find a breakthrough cost reduction that can really turn things around.
 
Assuming you want to secure the survival of your business and look for breakthrough strategies that will yield especially big benefits, you will have to look outside of your company's normal comfort zone. This means looking where you do not usually look for successful strategies.
 
Here are seven strategies that will help you find some breakthrough cost savings.
 
1.

Within your own industry, learn what other companies have done to turn themselves around. Scour industry magazines for companies that stand out. Survey conferences for peers speaking about their innovations and explore the fringes of your own industry for people and companies that are changing in substantial ways. Are there companies that are gaining market share? Find out why.
 
2. Design new products or services that provide exceptional value. Apply the 80-20 rule to design new offerings that get most of the customer value at a fraction of your cost. 
 
3. Restructure production methods to eliminate unnecessary complexity. Reorganize functional departments into self-managed teams responsible for entire production processes.
 
4. Re-engineer bloat out of the production process. Make your business more efficient by streamlining your own productions methods. Get back to simple. 
 
5. Look for new business models that share risk and rewards with the supply chain. Explore partnering arrangements that enable suppliers to invest in new products, development or operating efficiencies.
 
6. Outsource business processes on a per unit basis and eliminate overhead by purchasing the service.
 
7. Benchmark best practices outside your industry. Study the efficiencies of automobile production, the customer relationships of remodeling companies, and the quality control of pharmaceutical firms. Learn from the best within these industries. 
 
The sad truth is that most companies wait until the very last second, when the entire organization is tanking before they look for help. Get started now while you still have some breathing room, the more time that passes, the more desperate you will become to find a quick fix solution. Figure out how you can make breakthrough cost reductions while you still can.