By Natalie Johnson
When revenue slows down or growth gets messy, most founders rush to cut spending in the easiest places they can find. Yet slashing line items across the board often breaks the day-to-day operations that brought in revenue in the first place. Cliff Carnes, Fractional Chief Operating Officer at BCC Group, sees cost control not as an exercise in shrinking a business, but as a way to clean out broken processes and hidden waste. Done right, trimming the balance sheet should protect how much work a company can get done.
Finding Waste by Working Backward
In an early-stage company, daily routines get built on the fly just to get work out the door. Over time, those early workarounds turn into permanent habits that quietly eat up payroll and team hours. “So, I think you have to look at the process that you’re using for your business. A process might be fantastic when you’re starting out, or even needed when you’re starting out, but as you grow, there are going to be inefficiencies in those processes,” Carnes explains. Instead of guessing where the slowdown happens, leaders need to trace how work really moves through their teams.
To find these broken links, Carnes takes a reverse approach to auditing workflows. “I like to backward- or reverse-engineer things,” he explains. “So, you go to the end product and you say, ‘Well, what was this last step before we got to the end product?’ and then, ‘What was the last step before that?’ and go through every process.” Walking through each step in reverse quickly brings work that is being duplicated into plain view. In many growing teams, two or three people end up handling the exact same handoff without knowing it. “And I think what you’ll find with a lot of growing companies is there’s a lot of redundancy in those steps,” Carnes points out. “And they almost always say, ‘I didn’t know they were doing it.’”
Checking Real Software and Office Use
Recurring monthly bills create another quiet drain on working capital. As teams expand, they tend to sign up for databases, research tools, and software accounts that people stop using within a few months. Asking staff whether they like a tool rarely helps, because most employees will reflexively say it is useful. The only real way to know if a cost makes sense is to look at hard login records.
“You look and you’re subscribing to four databases that you thought were good ideas, and now they’re not used,” Carnes notes. “So, you’ve got to go back to those data providers or services and say, ‘I need the login for this. When was the last time we logged on, and who logged on to it?’ Great. Two people are using this data. Why do we have 10 licenses?”
This same practical test works for physical space, club dues, and outside vendor bills. If half the staff works from home, paying for a giant lease is just burning cash that could go toward real growth. “It’s not painful. It’s not exciting. It’s not sexy. But what is actually being used?” Carnes says. Small bills might look harmless by themselves, but together they add up to serious money.
Why Cutting Sales Budgets Backfires
When cash runs low, a founder’s gut instinct usually says to stop spending immediately. While that reaction is normal, cutting the wrong parts of the budget can dry up incoming sales. Carnes points out that field expenses often pay for themselves many times over. Sales representatives who spend money meeting clients face-to-face usually close far more deals than those who sit at their desks.
“If you look, as an example, at your sales force or your sales team, are the people who have higher expense accounts spending more every month selling more?” Carnes asks. “Are they getting out of the office and taking people to lunch? Are they buying people drinks? Are they meeting them for coffee? I can tell you, almost always, that’s a yes: they’re doing better.” Cutting budgets without looking at what brings in cash can trap a company in a steep drop. Marketing and sales outreach are often the first lines to get chopped during tough quarters. “What’s the first budget that always gets cut? Marketing,” Carnes explains. “Okay, we need to sell more, and we’re cutting back on what helps us sell. There’s a conflict there.”
Staying Focused to Stop Growth Creep
Cost troubles do not always come from high bills; sometimes they come from chasing too many ideas. When an early-stage company finds some traction, leadership often tries to launch new service lines before the main business is steady. Carnes calls this growth creep, and it quickly spreads a team too thin. Without clear focus, businesses end up spending heavy payroll on projects that do not pay off.
“Many companies have growth creep, as I like to say,” Carnes warns. “They’re going to open up a new avenue for products or services, but they don’t stay within that. It just keeps getting wider and wider, and pretty soon they’re trying to do eight things very ineffectively, as opposed to the one thing they started out very mission-focused on.” Fixing this requires keeping capital tied strictly to areas with clear proof of profit. Leaders need to set hard limits on how far a new project can branch out. By staying committed to the core offer, companies avoid hiring extra hands for projects that go nowhere. Discipline here protects team energy and keeps costs predictable.
Updating Job Roles and Keeping Key Staff
Growing from 15 to 75 employees brings a whole new layer of operational friction. People who wore five hats when the company was small cannot keep doing all of those tasks once headcount jumps. Carnes suggests that founders sit down at least once a year to look at exactly what every person does. Trimming down an employee’s daily duties helps them focus on the work that moves the needle today. “Are they doing what’s helpful right now? Are they doing what was helpful a year ago?” Carnes asks. “Because if you’re growing, that’s probably shifting a little bit. Maybe they need a narrower scope of work because they’re doing more of it.”
At the same time, leaders must take talent retention seriously as their market presence expands. Replacing strong performers is far more expensive than paying them well and giving them good working conditions. “The cost of replacing talent is way more expensive than anybody ever imagines,” Carnes says. “Not just the hiring and finding, but the training, the downtime, and the lag between hiring them and having them become proficient at the job is very expensive.”
One of the biggest mistakes a founder can make is asking every department to cut costs by a flat percentage. Telling every manager to trim 10 or 15 percent hurts high-performing teams while letting real bloat stay hidden in other parts of the company. A better plan is to look at each team separately and see where money is being wasted. Some teams might need spending cuts, while others might need more budget to keep output high. “Cut smartly, not financially,” Carnes says in closing. “What budgets can be cut 12% without affecting capacity, and what budgets do we absolutely need to maintain and possibly increase?”
Follow Cliff Carnes on LinkedIn for more insights on fractional operations, cost control, and scaling growing businesses effectively.
