Why is it that so many celebrities claim to have been ugly teenagers? For some of us, those ugly teenage years are as good as it gets and it’s the same for many New Zealand businesses. It’s sad to see so many struggling in that ugly duckling stage despite being innovative, working excruciatingly hard and doing the best job.

What is it that holds them back from becoming business superstars?  We think it’s got a lot to do with Scrooge McKiwi syndrome.  Scrooge McKiwi is our pet name for those time stealing customers who’re so intently focused on saving every little cent that they fail to see the hidden costs of cost cutting.  You know the ones – they drive your prices down so low that you end up working for less than minumum wage or making a loss. What these penny pinchers aren’t smart enough to realise is that:

1. Cutting costs isn’t a competitive advantage – anyone can do it.
2. Cost cutting doesn’t grow businesses. At most it’ll gain some efficiencies but only until there’s nothing left to cut.  Homeless people are cost cutting masters.
3. Cost cutting damages relationships and relationships are what grows businesses.  Tell me, do you go the extra mile for someone who’s throttled you on price?
4. The cheapest are rarely the best and often cost more.  Look at all those cheap leaky homes we ratepayers are forced to pay for (and accounting-wise, this week alone we saved two separate clients over $10,000 of tax which their previous cheap Accountants lacked the skill to see).
5. Being cheap usually increases risk.  The best staff are expensive because they generally make less mistakes, make customers happy and require less training.
6. Time spent cost cutting is expensive.  It’s more productive focusing on revenue & getting revenue right means the costs take care of themselves.
7. Losers bring winners down. If all your clients force your prices down you’ll be stuck at the bottom with them.
8. New Zealand doesn’t have the volumes to compete on price alone.
9. Cost cutting drives everyone’s wages down.

Cost cutters claim they do it because they’re not paid enough but it’s cost cutting that drives wages down.

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