David Gilbertson's Wine Bar Theory: Cut smart
Smart businesses re-examine each element of what they do and ask whether the customer really needs it
All this week we’ve been bringing you pieces of business advice from our new book, Wine Bar Theory by David Gilbertson. As CEO of media company Informa, David built the oldest newspaper in the world, Lloyd's List, from a loss maker into one of the world's largest business media groups, with annual sales of more than a billion dollars. Now he's formulated a few simple tips to save you time on the road to success and so give you a little more time in the wine bar or wherever you like to spend your downtime. Here's tip number 10 from Wine Bar Theory: cut smart.
“Wine Bar Theory businesses want all the work they do to go towards creating things their customers value. They cut the stuff the customer doesn’t care about and wouldn’t pay for, saving time and effort too. Costs in a business are there to help it drive revenue. They should relate to the things your customers like about what you do.
If you cut costs indiscriminately you will end up with less revenue over time. Because the chances are customers won’t like what you do as much as they used to. There is only one way to reduce costs sensibly and it’s never by cutting a certain percentage of everything. It’s by examining everything you do in real detail and checking two things: Do you still need to do it all? Could the things you still need to do be done better?
Businesses tend to keep doing things they’ve always done, and progressively add to them each time they think of something else they could do as well. That way they get progressively busier but no wiser. As they get busier they become less clear what really matters; less sure what customers really value in what they do.
Wine Bar Theory businesses don’t mistake busy for effective. Smart businesses regularly re-examine each element of what they do, and ask whether the customer really needs and values the work they are doing. If the customer doesn’t value it much or even notice it, it may not be necessary to do it at all.
Often businesses forget to check that and they end up working for themselves, rather than their customers. Why? Because they have always done things that way. They end up doing things they don’t really need to do, and incurring unnecessary costs. Smart costs are different. They are not the enemy of profit, they are the friend of revenue. Let’s meet a smart cost now. It’s revenue’s very best friend.
Like what you've read? Let us know below, and check back tomorrow for our final extract. Next week we'll be running our interview with David. Meanwhile, pick up a copy of Wine Bar Theory in the store.