6. Lean, Not Mean - How to Trim Costs Without Killing Momentum

Where to cut, what to keep and how to maintain capacity responsibly

1. Introduction

Cutting costs is a natural instinct when revenue slows. But done without care, it can create more harm than help. There’s a difference between running lean and hollowing out your business. The goal is to reduce pressure while keeping the wheels turning and your team motivated.

This article belongs to Pillar 2 - Protecting Your Business. It focuses on how to trim costs wisely, avoid false savings and preserve the capacity that will carry you through recovery.

2. Representative Narrative

Jasmin owns a boutique architecture firm in Dunedin. Business slowed after several clients delayed their builds. Her instinct was to cut back on marketing, cancel software subscriptions and reduce hours for her junior staff.

Before making the changes, she called John Luxton at RegenerationHQ, who had helped her through a previous slow patch. John asked her a simple question - “Will these cuts help you survive, or make it harder to recover later?” It made her pause. She realised some of the savings were short-term wins that could cost her momentum when the market picked up again.

3. Recommended Actions

• Categorise your costs into core, supportive and discretionary
  Core costs are essential for delivering value to clients. Supportive costs keep operations smooth. Discretionary costs are nice to have but not vital. Cut from the outer circle in.

• Use a 90-day lens
  Ask, “If I cut this today, what effect will it have in the next 90 days?” Some cuts take time to show their true cost.

• Protect your revenue engine
  Avoid cutting anything that helps bring in new work or retain customers. Marketing, quoting tools and client service staff often fall into this trap.

• Talk to suppliers
  Before cancelling services, talk to providers about discounts, payment extensions or downgraded plans.

• Engage your team
  Invite suggestions from staff on where to save money without reducing quality. Often, they spot inefficiencies leaders miss.

4. Expected Outcomes as Narrative

With John’s help, Jasmin reviewed her monthly spend and sorted it into three categories. She identified two software subscriptions that were duplicated and a rarely-used storage unit that could be consolidated.

Rather than cut her junior staff’s hours, she redeployed them onto an internal sustainability project that had long been on hold. She also worked with her marketing consultant to shift to lower-cost digital channels instead of pausing promotion entirely.

The result was a leaner, more focused business without damaging her ability to deliver. The team stayed engaged and her clients never saw a drop in quality.

5. Red Flags & Mitigating Strategies

Red Flag 1 - Cutting marketing or sales-related activity too soon
Mitigation -  Scale back, don’t shut down. Focus on high-return channels.

Red Flag 2 - Reducing staff hours without a plan to use their time better
Mitigation -  Look for strategic projects, training or internal improvements

Red Flag 3 - Cancelling tools or systems that support your efficiency
Mitigation -  Review alternatives or downgrade features, not entire platforms

6. HR Best Practice

Cost-cutting often impacts people. It’s essential to handle changes with fairness, clarity and respect.

• Be transparent about why changes are being made

• Involve staff early, especially if their roles are being reshaped

• Offer voluntary reduced hours before compulsory cuts

• Maintain performance conversations even during tough times

John often reminds owners that cutting team hours or roles without a longer-term plan can weaken both trust and capability. Staff who feel blindsided rarely stay loyal.

7. Psychological Perspective

When pressure builds, it’s tempting to slash anything that feels like a luxury. But fear-based decisions often backfire. The guilt or second-guessing that follows can erode confidence and affect how you show up as a leader.

Taking the time to assess, not just react, supports mental balance. As John says, “It’s not about what you cut - it’s about what you preserve.” That clarity makes the hard calls easier to live with.

8. Recommended Owner's Mindset

Approach cost reduction with strategic discipline. The mindset here is “shape and sharpen,” not “slash and burn.” Your business needs to stay responsive without damaging its core strength.

9. Reflective Questions for the Owner

• Which costs are essential to customer satisfaction or revenue delivery?

• What savings could weaken my long-term competitiveness?

• Have I asked suppliers or partners for flexibility before making cuts?

• What are my team members seeing that I might have missed?

• If revenue returns in 3-6 months, will today’s cuts make it harder to recover?

10. Suggested Ongoing Actions

• Reassess your cost structure every quarter, not just in crisis

• Monitor the effect of cuts on delivery time, morale and sales activity

• Keep a live document of “temporary reductions” to review in 60 days

• Ask your accountant or advisor like John Luxton to review your revised spending plan

• Reinvest small gains in high-impact areas once cash flow stabilises

Critical Takeaway - Cutting costs wisely is not about doing less - it’s about doing only what matters most and doing it well.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.