With 2020 coming to an end and COVID-19 still causing both public as well as economic chaos, companies must prepare its cost base for 2021, as it is expected to become another challenging year.
As we already stressed in our blog from 26th February 2020, this shouldn’t be solely a cost-cutting exercise, as cost-cutting won’t create growth! Your cost base requires right-sizing to fit the shape and size of your company as well as your business performance.
Re-calibrating and right-sizing your cost base requires tailoring like no other. You need to optimize your cost- and resource-flexibility, enabling your business to rapidly scale up and scale down based upon demand and external market conditions.
Our consultants, all seasoned executives who have been in your shoes, worked under comparable conditions to those faced by you today: Immediate loss of customer contracts, demand-erosion, increased competitive pressure, fulfilment restrictions and supply chain challenges. We understand the pace and flexibility required.
To generate (or improve) profit in 2021, as well as in the long run, we now more than ever suggest to:
- Identify and assess activities to stop immediately; many activities are not required during this period due changes in business demand
- Evaluate your make or buy decisions; some activities, services and products can be outsourced to create additional flexibility
- Assess best practice cost performance and right-size to adjusted revenue forecast; assess (process) costs as a proportion to revenues and right-size proportionally to adjusted revenue forecast
- Assess your high-spend supplier contracts; many supplier contracts offer opportunities for (re-)negotiation and to reduce your spend
- Identify and assess restructuring charges; restructuring charges are short-term and nonrecurring operating expenses and are included in the financial statements of your company to calculate net income. Both IFRS and US GAAP require certain restructuring costs to be recognized in the financial statements before the restructuring actually occurs
Curious as to what we can do to help your company re-calibrating its cost base for 2021?
Please visit our website; https://athenapartners.eu/services, or contact us directly.
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