Constructive cost-cutting

Steve Barnes, CEO of online marketing company Infoserve, doesn’t much like the term cost-cutting.

Instead, he talks about the ‘strategic overview’ he conducted last October, which concluded that half a dozen of the company’s projects could not generate a short-term return.

Some of them, such as an effort to bring local search onto a mobile platform, had shown great promise.

‘Mobile and local search go together very logically,’ says Barnes. ‘But you have to monetise everything. I couldn’t believe that in 12 to 18 months we’d be able to monetise this successfully.’

Dermot Hill, director of interim management provider Intramezzo, says that strategic cuts are more powerful than tactical ones: ‘Cancelling this advert or that campaign might save money but it won’t have long-term importance.

‘If you can cut out part of your company that you thought had great potential but haven’t the resources to build now, it’s more painful but also more effective.’

Barnes accompanied his programme of cuts with a cheap but effective PR campaign in Darlington, where one of Infoserve’s offices is based. This won many new recruits to the company’s sales force, slashing the fees the company paid to agencies.

As a result, Infoserve made combined annualised savings of £700,000 and trimmed operating losses for the six months ending March by 12 per cent to £2.7 million.

Read Ken Jacobson’s advice on surviving a recession here.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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