Does cost cutting hurt a business: the honest answer.

The strongest objection in the book.

For example, a survey of two hundred business leaders found firms that slashed costs, staff costs above all, delivered ten per cent lower shareholder returns. Similarly, Ernst and Young found forty per cent of cost programmes never start. Also, a study of Finnish turnarounds found cost cutting mattered more in the unsuccessful ones. Worse, a survival chapter can feed the very escalation it warns against.

Does cost cutting hurt a business cut to the bone.

The author largely accepts the objection. Indeed, Laozi, in James Legge's translation, warned that a point kept sharpened cannot long preserve its sharpness. He wrote about overreach, not a company in trouble, but the image still holds. After all, a business cut to the bone is smaller, not saved. As a result, it has no capacity left, and lost competencies are often not rebuildable.

Nobody can hand you the closing decision.

However, the author parts from the objection on one point: there is no threshold. Deciding when to close your business has no published rule, and experimental work began only recently. So the decision can only be yours, made in writing before sunk costs take hold.

Finally, one study brings comfort about closing a successful business. Owners often called their businesses successful at the moment they decided to shut them. In short, closing is not the same event as failing.