Cost-Cutting Won’t Save Your Business
(And It Might Quietly Kill It)
Cost-cutting always sounds like the responsible thing to do. It feels clean and logical. “We’re not making enough money… so we’ll spend less.” Simple, right?
But most of the time, that’s not what’s happening. What’s actually happening is a response to panic.
Rowan jokes early in the episode that “cost-cutting” is usually said with a sigh, not a smile, because it’s rarely a strategic move. It’s a reaction to fear: bills are coming, cash feels tight, and the fastest way to feel in control is to start chopping things off.
And yes, sometimes you do need to cut costs. But most businesses don’t understand the difference between cutting costs and managing costs. One is smart, while the other is a slippery slope that can wreck your service, your culture, and your reputation without you even noticing until it’s too late.
What “Cost Cutting” Really Looks Like
It makes me think of Gordon Ramsay’s Kitchen Nightmares. Again and again, you hear owners say that costs were too high and so they need to cut back. That means they
In a restaurant, cost-cutting might look like:
Swap to cheaper ingredients
Remove parts of a meal without telling anyone
Use frozen supermarket vegetables and charge premium prices
Quietly reducing portion sizes while keeping prices the same
On paper, those are small changes. But from a customer’s perspective, they’re not small… A frozen meal for the price of a fresh one is a rip-off. That’s the problem with a lot of cost-cutting: it’s invisible to the business… but so loud to the customer.
The Real Risk: You Don’t Just Cut Costs, You Cut Trust
If you give someone something, then snatch it back out of their hands, they won’t just feel disappointed, they’ll feel disrespected. That’s what a lot of cost-cutting feels like.
Customers don’t just evaluate what they’re getting; they’ll also look at whether you’re trying to quietly take things away while pretending nothing changed. And once that trust is gone, it’s hard to win back.
Big businesses can sometimes absorb this because customers don’t always have many alternatives. Small businesses don’t have that luxury.
If your local café pulls that move, people don’t write a complaint letter; they just go around the corner. And they tell ten people.
“Saving Money” While Losing the Brand
We can use Qantas as a case study, not to bash them, but because it shows what happens when cost-cutting starts to eat away at the experience. The issues weren’t one massive disaster; they were dozens of small touchpoints:
Flights were delayed due to poor communication
Confusing app updates (“boarding soon” → “flight closed” while everyone’s still waiting)
Baggage delays
Outsourced customer service that couldn’t solve problems confidently
Inconsistent handling of itinerary changes
Internal frustration from staff who are left dealing with the fallout
And that’s the key point: Cost-cutting often doesn’t remove problems; it moves problems onto the customer and the remaining staff.
You can feel the internal breakdown too. Rowan describes a staff member openly complaining about outsourced baggage handling. That’s a culture signal. When employees are saying things like that to customers, morale is slipping, pride is slipping, and the business is eroding from the inside.
Consumer confidence is fragile. Once customers start wondering, “If they’re cutting costs here… where else are they cutting?”, the brand is already in trouble.
The Hidden Cost is Internal: Morale, Capability, and Turnover
One of the most underrated parts of this episode is how clearly they link cost-cutting to staff confidence.
Rowan shares his experience working in outsourced customer service environments where nobody had full access, nobody had the tools, and customers were bounced between hoops and departments. It was frustrating as an employee and worse for the customer.
Then he talks about an office that “saved money” by downgrading the workplace:
No tea or coffee
One cup to share
Unpleasant environment
Basic resources gone
People underestimate how much these changes signal:
“This business is tightening. This business is unstable. This business is cutting corners.”
And once employees start thinking, “How long is this job going to last?” they start planning their exit, even if they haven’t told you yet.
Cost-cutting doesn’t just cut expenses. It can quietly cut:
Loyalty
Engagement
Service quality
Retention
Pride
And those are expensive to lose.
The Slippery Slope
Cost-cutting can trap businesses in a cycle.
You cut something to stay afloat. Then the service drops, customers notice, revenue drops, and so you cut more. Now you’re not fixing the business, you’re shrinking it.
That’s why they keep coming back to the same idea:
If your problem is profitability, you need to look at the top line, not just slash the bottom line.
We aren’t saying to “never cut a cost”, instead, we are encouraging you to be careful that you don’t cut the very things that create revenue. Sometimes you need to invest even when you feel like you can’t afford it.
It’s often easier to make $10,000 than to save $10,00 because there are only so many costs you can cut before you’re cutting muscle. The great news is that there’s no ceiling on improving:
Your offer
Your value
Your customer experience
Your products and services
Your referrals and partnerships
Your marketing and touchpoints
Using COVID as an example, those businesses that pivoted and used idle time to create new offers didn’t just “survive”; many grew. Others cut back so hard that they never recovered their capability.
So why did you start the business in the first place?
If you’re at the point of cost-cutting out of stress, you’re probably not loving your business right now. Going back to the original reason often reveals what needs to change because the answer usually isn’t “cut more.” The answer is:
Rebuild value
Improve the model
Get help
Create a smarter plan
or in some cases, move on…
HARD TRUTH: Maybe it’s time to sell, close, or shift direction rather than slowly suffocating something that isn’t working anymore.
My Final Thoughts
Cost-cutting might create short-term relief, but it often creates long-term damage to your customers, your employees, and your brand.
Manage costs, of course, but be smart about it. If you’re cutting things that reduce trust, reduce service, or reduce capability, you’re not fixing the business; you’re just shrinking it. If you want to get out of survival mode, don’t just look for what to remove.
Look for what to improve.
Look for where value can increase.
Look for how to build the top line.
And if you’re stuck, ask for help. Pride is expensive. Advice is cheaper.
