Reducing Costs

The majority of turnaround situations involve companies with either flat or declining revenue or decreasing margins; and cost management is a critical activity to decrease the burn-rate. KGI's goal is to identify cost reduction opportunities and provide management with the tools to fuel dramatically improved efficiency.

Our initial assessment centers on four basic principles:

It is the determination of truly fixed costs that is most critical to near-term cost management and cash flow. KGI focuses on eliminating or renegotiating major operating expenses including:

• Leases
• Insurances
• Compensation
• Product / Service Lines
• Distribution Channel

Labor costs are significant for many businesses and our initial approach in Rightsizing is to fundamentally understand the business. At the forefront of our approach is the mindset of creating structures that maintain or improve the Client's effectiveness with fewer resources. It is only then that we, for example, might recommend the consolidation of functions through centralization of the use of technology.

KGI recognizes that rightsizing must be precise. Broad, across-the-board salary cuts could have a detrimental and lasting impact whereas a well-thought surgical restructuring that strengthens a business' competitiveness is often embraced by employees.