By George Volsky, Instant Software - Director of Research
In a recent blog, I suggested that you look for ways to become more efficient in 5 categories. I include my thoughts about the fourth of these: trimming fat to become more lean and fit.
During prosperity, companies, like people, tend to buy things they don’t absolutely need.
Sometimes, the purchase looked like it could produce great benefits, and the buyer gave it a chance because he could afford to experiment. Sometimes, the purchase generates tools that the manager loves but fail--when the numbers are examined—to generate enough new bookings, homeowners or savings to justify the program’s cost.
When prosperity disappears, it can be difficult to re-evaluate the cost-effectiveness of expensive systems that we formerly celebrated as a generator of competitive advantage. All programs benefit someone, and any effort to eliminate them generates pushback, especially if they have been integrated into the company culture.
No one can help you find the fat. But I can offer this encouragement to do so:
As much as you might hate to reduce services, amenities, or staff, you have a duty to your company’s employees, renters, and homeowners to generate enough profit during slow times to meet your company’s cash flow needs and pay for new initiatives that may be needed to retain and attract homeowners and renters. By becoming lean, you free up money that can be redirected to buy more service than your competitors (allowing you to offer customers a better value). Conversely, you will lose renters and homeowners if you allow a competitor to become leaner (more efficient) than you are.
Failure to trim fat jeopardizes the major stakeholders in your business, all of whom depend on you.
- Unneeded “fat” translates to lower productivity for each dollar of expense;
- When customers think they can get better value elsewhere and start to leave, others start thinking about doing so;
- Once homeowners and renters feel that another company offers a better value, it takes years to turn that perception around.
Being a manager means making the hard decisions. This is a time of change in our industry, which makes it the time to revisit all the assumptions behind major expenses.
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