Big, across-the-board cost-cutting, chiefly characterized by
massive layoffs, was a fad among large corporations in the 1990s.
Companies laid off more than 700,000 people during 1999 alone,
according to career services and placement company Lee Hecht
Harrison. But that kind of cost control failed to catch on among
entrepreneurs. One reason is that small companies are leaner than
large companies, so huge cost curtailment risks cutting beyond fat
and into muscle. "If you take it off company-wide, you're
taking off things you need," says Jeff Olson, 43-year-old
co-founder of Velocity Business Publishing, a book and e-book
publisher in Bristol, Vermont.
With robust sales growth, cost savings seems unimportant to many
entrepreneurs. Jeff Musa, founder and president of Cutting Edge
Software Inc. in Dallas, is a typical case. "Our business is
in exponential growth mode," says Musa, 43, whose five-person
company writes spreadsheet software for Palm Pilot hand-held
computers. "Worrying about costs just drags us down."
Entrepreneurs don't appear to be suffering for their lack of
cost concern. In 1998, annual business bankruptcies were down 31.6
percent from 1990, according to the American Bankruptcy Institute.
But with a slowing economy, 2001 should see more bankruptcies.
"Even if the economy's good," says Olson,
"individual companies can certainly be mediocre—and
worse."
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Though survival may not be a burning issue for most firms at the
moment, the seeds of the next age for cost control may already be
sown, according to Wil Uecker, an associate dean at the Jones
Graduate School of Management at Rice University in Houston.
Shoppers of all kinds can now compare prices for many products and
services using Internet search engines, online trading and shopping
services such as Priceline.com and eBay. "The comparison
shopping that now exists means you have to be cost-effective,"
says Uecker.
Finally, no matter how robust your condition, it could always be
better. Liposuction cost-cutting produces savings that beautify the
bottom line—even if the top line looks the same. "What
it's all about is profit," reminds Mollerud.
"Whatever you can bring to the bottom line strengthens the
company."
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