Right-sizing is about optimising the use of scarce resources within a business to improve its sustainable future performance relative to likely demand. It should only be attempted after a full review of performance to plan, within a sector context. Maybe a measure of up-scaling or out-sourcing is called for? Sometimes, bigger may be better, but not always, depending upon the objectives and Management’s capacity to manage and finance growth and/or acquisitions. In loss-making businesses, down-sizing may be the first course to consider, subject to its costs and implications.

The strategic review we advocate need not be expensive. Even if there is no firm plan, a review should produce one quickly, so that any right-sizing may be approached with due focus on the key objectives. We use proven methods to help businesses assess their weight and shape and to point them towards the range of measures that may be needed to make meaningful improvements. As a business leader, you are responsible for preventing your business from going out of shape.

Consider these areas:

Have you set appropriate performance indicators, and do you take meaningful corrective action when variances occur?

Are your limited resources best directed towards achieving desired results? Do you understand your business’s most crucial limiting factors? 

Have you kept pace with significant shifts in your core markets and benchmarked your performance against comparable sector competitors? Are your sales, margins and profit per employee different to those sector norms?

Do you keep on top of under-weight and over-weight areas as a rolling plan towards progressive right-sizing? Remember that uncorrected imbalances in the use of labour, space or capital will drain cash.