The instinct is usually wrong When things get tight, people reach for the obvious. Marketing budget. The new hire you made three months ago. The software you forgot you were paying for. I have watched this play out dozens of times. Someone comes to me after a bad quarter, or after a client disappears, or after petrol hits 163p a litre and suddenly their delivery costs look different. They want to know what to cut. The instinct is to cut what feels most recent. Or most visible. Or most optional. But that instinct is usually wrong, and I want to explain why. The real question is not what costs money It is what generates money. And more specifically, what generates money relative to what it costs. This sounds obvious. It is not obvious in practice. When I sit down with someone restructuring their business, the first thing I ask is: can you tell me, right now, which of your activities produce the most revenue per hour of your time? Most people cannot. They have a feeling. They have a sense. But they do not have the number. So before you cut anything, you need that number. For every major activity in your business. I worked with someone last year who was convinced their consulting work was their core business and their digital products were a side project. When we actually ran the numbers, the digital products were generating £94 per hour of their time. The consulting was generating £31. They had been treating the profitable thing as optional and the unprofitable thing as essential. The order of cuts Here is the order I use when helping someone restructure. Not because it is the only order, but because it tends to protect the things that actually matter. First, cut what you are not using. Software subscriptions you forgot about. Office space you do not need. Memberships you signed up for in an optimistic moment. This is the easy stuff, and it is where most people stop. But it is rarely enough. Second, cut what is not working. This is harder, because it requires you to admit something is not working. That marketing channel you have been trying for eight months with no results. That partnership that was supposed to bring referrals but never did. That service you offer because you always have, even though no one asks for it anymore. These are the cuts that actually change things. Third, cut what is working but not working enough. This is where it gets painful. You might have a client who pays reliably but takes up 40% of your time for 15% of your revenue. You might have a product that sells but has such thin margins that every sale costs you more than it makes. These are the cuts that feel counterintuitive, because the thing is not failing. It is just not succeeding enough to justify its place. Last, cut capacity. People. Hours. Your own time. This should be the final resort, not the first. Because once you cut capacity, you limit what you can do when things turn around. And things do turn around. The mistake I see most often People cut marketing first. Almost always. I understand why. Marketing feels optional. It feels like something you do when times are good. And when times are bad, it feels like a luxury. But marketing is how you get the next client. If you cut it entirely, you are betting that your current clients will sustain you through the difficult period. That bet rarely pays off. I am not saying never cut marketing. I am saying cut the marketing that is not working before you cut marketing as a category. There is a difference between stopping a campaign that has not produced a lead in three months and stopping all outreach because you are scared. What Volkswagen gets right I noticed this week that Volkswagen is cutting 50,000 jobs and halving its product line. That is a brutal restructure. But look at the order: they are cutting products first, then capacity. They are not trying to make the same number of products with fewer people. They are reducing what they make, then reducing who makes it. That is the right order. Scope first, then resources. Most people running their own thing do it backwards. They cut the team, or cut their own hours, and then try to maintain the same scope. That does not work. You end up exhausted, delivering worse work, and still losing money. How to figure out what to cut You need data. Not complicated data. Just: what does each thing cost, and what does each thing produce. I use a simple framework with people I work with. List every major activity or expense. For each one, write down the monthly cost in time and money. Then write down the monthly return, as specifically as you can. Revenue, leads, whatever matters. Then sort by return divided by cost. The things at the bottom of that list are your candidates. If you want a structured way to do this, the Decision Matrix tool at alira.london can help you weigh options against multiple criteria. But honestly, a spreadsheet works too. The point is to have the numbers, not to have the perfect tool. The thing nobody wants to hear Sometimes the thing you need to cut is the thing you started the business to do. I have seen this more than once. Someone starts a business around a service they love. Over time, other services get added. The original service becomes less profitable, but they keep doing it because it is the reason they started. That is understandable. It is also, sometimes, the thing that is sinking them. Restructuring is not about cutting what you do not care about. It is about cutting what does not work. Those are different lists. What to do this week Monday: List your five biggest expenses and your five biggest time commitments. Write down what each one costs and what each one produces. Be specific. Actual numbers. Wednesday: Rank them by return on cost. Identify the bottom two on each list. Ask yourself honestly: if I cut these, what would I actually lose? Friday: Make one cut. Not a dramatic restructure. Just one thing that is clearly not earning its place. Cancel it, stop it, or phase it out. See how it feels. Then decide if you need to go further.