The document discusses traditional versus strategic approaches to cost management. Traditional cost cutting involves indiscriminately cutting expenses through means like reducing employee headcount, product components, or maintenance which can damage a brand. Strategic cost cutting aligns reductions with business objectives and strategy to improve profitability and competitive position in a controlled manner. While traditional approaches are reactive and uncertain, strategic cuts are planned and aim to support long-term wins. The document advises determining the root cause of cost issues and establishing goals before deciding between traditional short-term or strategic long-term approaches.

1. Trimming the FatTRADITIONAL VS. STRATEGIC COST MANAGEMENT STRATEGIES
PRESENTED BY
YOUR BFF BFG

2. Traditional Cost Cutting
Traditional cost cutting strategies
involve cutting expenses by any
means necessary
• Cutting Corners
• Cutting Employees
• Cutting Product Components
• Cutting Maintenance
• Cutting Training
= CUTTING BRAND INTEGRITY!!

3. Strategic Cost Cutting
 Aligned with business strategy
 Based on specific objectives
 Increase profitability
 Gain strategic advantage
 Achieve greater efficiency
 Shift financial emphasis
 Preparing for growth
 Increasing business valuation

4. Differences
Traditional Strategic
Reactive Planned
Desperate Controlled
Business continuation
oriented
Business strategy oriented
Uncertain outcome Positive outcome
Short-term win Long-term win
Finance focused Business focused

5. When to Employ Each
Traditional Strategic
Catastrophic
Occurrence
Increase Market Share
Business or Technological
Obsolescence
Outmaneuver
competition
Liquidation New Business Model
Change in Market
Interest / Buying Habits
Process Re-engineering
Rapid economic
downturn
Increase Profits

6. Dangers
Traditional Strategic
May cut too deeply May take too long
May decrease customer
value
May grow too rapidly to
manage
May damage brand of
continuing business
May get outmaneuvered by
competition
May create low morale
with existing employees
New initiative may not work
as expected
May not be able to
recover
May not be able to recover

7. Opportunities
Traditional Strategic
Increase cash flow for
working capital
Increase cash flow for
investment opportunities
Greater productivity Efficiency increase
Ability to lower prices Ability to increase market
share
Decrease expenses Increase revenue and
profit
Solves immediate cash
flow issues
Creates future business
opportunities
Heads-down Approach Heads-up Approach

8. Getting Started
 Best to determine the root cause of the
problem
 Regardless of the approach, establish goals
 Evaluate risks and minimize or eliminate
wherever possible
 Establish boundaries – best to use company
core values
 Always get the opinion of your certified
financial professional

9. About BFG
Business Financial Group (BFG) is Atlanta’s Premier Tax, Accounting
and Advisory firm working with small business owners throughout the
United States.
Lead by CEO George Varghese, BFG serves small businesses to help
them gain greater control over their finances, ensure tax compliance
and create strategies for business growth.
For more information about how BFG can help your company, please
visit our website or contact our offices directly at +1 (678)735-4310.