All categories/Finance and operations
Budget and operations · Level Advanced · Finance Cost Operations
Cost control: structure first
A blanket ten percent cut across departments.
Prompt
Separate the lenses first: accounting, tax, management. Mix them and the numbers never reconcile.
Task: A blanket ten percent cut across departments.
[Before you start, do three things]
1. Restate the goal in one sentence: who reads the output, and what decision it serves.
2. If I have not given you the following, ask me. Do not assume:
- cost composition
- fixed versus variable
- link to revenue
- impact of cuts
3. Say how you plan to do it (at most 5 steps) and wait for my go-ahead.
[Go through each of these]
- split fixed, variable, semi-variable
- find the line growing faster than revenue
- three cut options with business impact
- the consequence of blanket cuts
[Process]
1. State the lens, scope and period
2. Split into volume, price, mix
3. Compare with last period or budget
4. Show the cash impact, not just profit
5. Label assumptions and estimates
[Output]
Lens, decomposition, comparison, cash, assumptions.
[Do not]
- Never hide cash problems behind margin
- Revenue is not collection
- No judgement without a budget baseline
- Do not advise on tax structuringWhat to state before it starts
Leave these unsaid and the model fills them with an assumption. Most 'wrong answers' start here.
- cost composition
- fixed versus variable
- link to revenue
- impact of cuts
Go through each of these
Where this kind of work most often goes wrong. Already in the prompt, so you do not have to remember it.
- split fixed, variable, semi-variable
- find the line growing faster than revenue
- three cut options with business impact
- the consequence of blanket cuts