Begin by identifying waste in your business. Anything that is not contributing to the generation of revenue will be the first place to look.
Let me explain this concept with an example. An entrepreneur asked me to help turn around his company that could not service debt. It was an IT services company with workforce strength of 1000 people.
The process that I followed was as follows:
I began by spending a few days examining in detail all his revenue and cost streams. It required looking at contracts, progress reports, balance sheets, speaking with staff, etc.
It was clear that the business was getting a regular stream of business, but a lot of that business was not yielding revenues that would cover all his costs. The more company you secured, the more losses were getting generated.
The business was being run on debt to maintain cash flows. Immediate stopping this low-margin business would have resulted in bankruptcy.
Once the problem is identified, the turnaround process is put in motion. Those parts of the organization generating revenues that would cover costs and bring in higher margins were encouraged. The low-margin loss-making areas of the business were slowly and steadily phased out. People in the loss-making low-margin components were axed, and more staff was added where the margins were good.
Turning around and cost-cutting is a delicate and company-specific exercise. It is done with a lot of care and caution. Cost-cutting should not lead to disruption of the business and its bankruptcy. There is no size fit solution. But is it all about identifying and removing waste?

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