Is it time for your company to stop cutting costs?

Originally published on bizjournals.com

For many US businesses, one story has played out repeatedly over the past several years: lower revenue and higher earnings. Investors may cheer the short-term results, but it's unsustainable over the long run. Eventually, the cost-cutting must end, and value must be created.

For any business owner, the opportunity to cut costs is a constant obsession, and the slow economic recovery we've been dealing with just makes cost-cutting an increasingly urgent concern. While cutting any unnecessary cost is good for a business, long term, sustainable value creation depends on constantly renewing and demonstrating a business's value to existing and potential customers.

Managers must evolve their business plans to meet customers’ changing needs. Every business, if it wants to grow, needs to identify how customers’ behaviors change and how this creates new markets—large and niche—that are as yet untapped. This goes for companies large and small.

Are you missing new opportunities?

It is crucial for businesses to understand how they can leverage their customer’s additional needs to produce new revenue streams. This can be done in many ways. It may mean offering more services, tailoring existing services to further serve customers' needs, or adjusting pricing tiers in a way that makes the product or service better for customers while augmenting the business’ earnings potential.

At the Argyle Executive Forum in 2009, I discussed the need for companies to leverage existing capital to create new business opportunities. These priorities are even more pressing today. Instead of cutting costs to boost earnings, businesses should evaluate untapped markets by bringing a fresh perspective to their existing business models.

Bringing the product to market

You and your business need to completely understand its entire supply chain, from production to delivery to service, before embarking on an initiative. This is why it is so important to leverage and build on existing business practices. Market experience can guide you, and make it possible to address the market with your new product or service quickly without sacrificing quality or introducing unnecessary friction into the process.

Some friction will arise—it always does. Fortunately, a disciplined focus based upon institutional experience can minimize risk and keep you ahead of potential problems. When you leverage your existing business model, you can apply the lessons you've learned in the past to your new venture. If it's entirely uncharted territory, try to learn from the mistakes and successes of the most relevant businesses. That is one of the cheapest and easiest ways to avoid foreseeable mistakes and turn those lessons learned into success.

Identifying core competencies to drive product or service conceptualization is the first step. The next step is identifying potential challenges in the design, production, and distribution stages in advance of constructing the business model and go to market plan.

The new economic environment has made margins thinner, competition stronger, and profitability more difficult—but by leveraging your existing intellectual capital, you can identify new opportunities, create value, and bring new products to new niche markets faster and more successfully.

By Geoffrey Rochwarger 

IDT Energy's CEO on Boston Marathon

A message from IDT Energy, Inc. CEO, Geoff Rochwarger: 

Geoff Rochwarger

Our hearts go out to everyone in Boston dealing with the bombings at the Boston Marathon earlier this week and our thoughts and prayers are with all those impacted by this horrific tragedy. In response to the impact felt in the wake of Superstorm Sandy, IDT Energy set up a donation portal supporting the efforts of the American Red Cross. As many of you know, the American Red Cross in Boston has a long history of supporting the marathon with volunteers and first aid stations all along the marathon route. Since the explosions, the Red Cross has provided both blood and support to several area hospitals to help meet the needs of those injured and will continue to assist whenever and wherever necessary in the days and weeks to come. We encourage everyone to join us in acknowledging the Boston City Police and Fire departments, first responders and volunteers, and would like to once again call attention to the wonderful work of the American Red Cross.  Please click here or visit www.idtenergy.com/in-your-community. You can make a donation directly, or continue on to the American Red Cross website to explore more ways to get involved. Thank you!

IDT Energy and Seasonal Utility Bills

It is important to consider the different options of paying one’s utility bills.

According to Geoffrey Rochwarger, CEO of IDT Energy, Inc.:

Geoffery Rochwarger - CEO of IDT Energy

“While consumers are often tempted by fixed rate, long term contracts, there are many sound reasons to avoid such offers. Looking at the past winter, for instance, offers a clear indication of why variable rate choices offer better opportunities. The winter of 2011 was dubbed “the winter that never happened.” The surprisingly mild weather offered consumers the potential to save on their winter energy bills. Additionally, prices for commodities have fallen, so the small amount of energy that consumers used was cheaper than it has been for many previous years.”

Check out IDT Energy's options with two free months of electric.