Skyrocketing prices, rising interest rates and more than a few years of “growth, no matter the cost ” fiscal policy have contributed to many companies feeling tight in the wallet.

Carrying a little extra is acceptable when companies are growing and the coffers are full… until a new economic reality catches up.

Know how you feel when you go to your yearly checkup and your doctor lets you know that things are getting a little out of hand? It’s kind of like that.

Even if Jerome Powell has a magical performance and somehow lands the economy as precisely as Captain Sully landing the Airbus A320 in the Hudson, companies are still preparing for a miss. Many C-Suites are not expecting another “Miracle on the Hudson” and are instead working with an assumption of the economy looking like this throughout 2023.

Everybody’s post-holiday plans include trimming some of that extra holiday joy from the beltline, but many businesses are beginning that journey now as they prepare their 2023 plans.

To prevent being surprised by leadership’s “knock on the door”, here are a few questions and exercises to perform now:

   1. A list of what you can cut, shouldn’t cut and can’t cut 

Never fun but necessary with the storm brewing that is the impending economic environment. Prioritizing your list items from most to least valuable from a high-level perspective and noting the potential fallout of cutting each will give you and your leadership a clearer vision of what to expect.

 2. The ROI on everything you absolutely do not want to cut 

While this might be a futile effort if the cuts are deep enough, having the ability to show a positive ROI will always be a strong indicator to keep the person, process or tool. If there is ever a way to change your CFO’s mind on an issue, the plan with the greatest chance of succeeding will involve a positive ROI. CFO’s care about numbers and a positive ROI will be in a language they can understand.

3. Strongest to Weakest Members of your Team

Every member of your team brings value to the table. If they don’t then they should’ve been gone a long time ago and placing these individuals on the list should be simple. This exercise, while a tough one, will help organize your thoughts and build arguments when battling leadership to keep members of your team. The best way we have found to do this is to segment your team into different tiers and categories based on both hard and soft skills.

4. Tools that are under-utilized / not creating value

Everyone has been sold a bill of goods about a tool that unfortunately just did not come true. Whether it be from difficulty in implementation, employee adoption or the sales rep just flat-out lying about what it could accomplish, it is time to inspect those tools and list them from the most to least important to the business. If they are underutilized, time to go back to the contract and see if there is a way out early or set a plan in motion to remove it from the organization when the contract is up.

5. Tools with overlapping features 

Software companies have continued to add features and toolsets to their initial products. Many products that started out as niche players have expanded into full-blown suites of services that can replace existing tools. Most likely, you’ll get better pricing by incorporating tools in an existing suite instead of having multiple contracts. Definitely worth exploring to save more essential pieces of the organization.

6. Identifying where automation can be utilized to make your team more efficient

Addition by subtraction is a no-brainer and is very easy to do with automation technologies. A prime example is the AP process of organizations. Organizations with a high degree of automation have saved 54% on invoice processing costs and use ⅓ of the workforce. Run those numbers by your CFO and see what they think; it might be the only smile you get out of them the entire meeting.

7. Identifying additional responsibilities your team can take on 

You’re super married to your team, as most “elite” leaders are. You hired and built your team from the ground up, you nurtured them, and you’ve watched them grow. The last thing you want to do is give them termination news, but how do you save them from the axe? One way is having your team take on additional responsibilities that are outside their current scope of work. This strategy is twice as potent because it reduces operational costs by merging team responsibilities and makes your team more vital to the organization, reducing the likelihood of cuts to your team. In an environment where resources are going to be increasingly difficult to acquire, it is best to use one stone to kill two birds, and have them not be your birds.

8. A documented allocation of everyone’s current time management

While this should be inspected on a frequent basis (monthly at a minimum), having it documented is important collateral for these conversations. This list should be a key part of your soft skills layout of the team (#3) and can be an immediate area of improvement for high or average-performing individuals if their daily routines include time waste. Understanding how time is being spent and being able to support it with documentation is a simple productivity exercise that provides the groundwork for a conversation with leadership and a way to make best use of team time in ‘23.

These exercises aren’t enjoyable or easy but strong leaders are forged through tough times.

   1. Tough – Check

   2. Doable – Check

   3. Stronger After – Check

After crushing some turkey tomorrow afternoon/night, spend some time pondering the most important pieces that lead to your success. Identify valid points and data to highlight during budget meetings because it is likely that your CFO is going to come knocking and it won’t be to hear about the holidays. Instead, it’s going to be like that checkup right after the holidays where the doctor says you’ve got to get into better shape, and they’re going to want to see your plan to start 2023 much leaner.

Let’s get to work.

Prescriptive Profits #11