'Fast-Growth' CEOs Again Seek To Cut Costs

By John S. McClenahen CEOs of many fast-growth small and midsize U.S. manufacturers and service providers are taking new steps to reduce overhead, operating costs and debt as a percentage of revenues, reveals a PricewaterhouseCoopers survey. The chief executives also are planning new growth strategies designed to allow them to spread expenses over a larger revenue base. More than half of the 403 CEOs surveyed, some 58%, plan to lower their companies' ratio of overhead to revenues, with a collective average goal of reducing the percentage to 22.2% in two years, 16% below the current 26.3%. During the next 12 months, some 41% of the CEOs plan actions to cut or contain future operating costs. Chief among the measures: improving productivity and making greater use of information technology. Debt reduction is also on the CEOs' minds. Collectively, their goal is to shrink debt as a percentage of revenues to 8.7% in two years, 27% below the current average of 11.9% Meanwhile, during the next 12 months, some 84% of the companies surveyed will be trying to generate new revenues, principally by developing new market segments and introducing new products and services.

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