Deploying a financial model to reduce SG&A (Selling, General, and Administrative) expenses involves a multi-step process that combines strategic planning, data analysis, and careful implementation. There are a couple of key steps to deploy our model to ensure steady progress towards our goal.

1. Identify Cost Reduction Opportunities

• Analyze Model Outputs: Use the model to identify areas where cost reductions can be achieved without significantly impacting business operations or revenue generation.

• Explore Cost-Cutting Strategies: Consider various strategies, such as:

• Process Improvement: Streamline workflows, automate tasks, and eliminate redundancies to improve efficiency and reduce costs.

• Negotiation: Renegotiate contracts with vendors and suppliers to secure better pricing and terms.

• Outsourcing: Evaluate the feasibility of outsourcing certain functions to specialized providers.

• Headcount Optimization: Understand staffing levels and consider attrition, hiring freezes, or restructuring options. If your model tells you that you are heavy in headcount, ensure you make the moves your numbers tell you to make.

• Technology Adoption: Implement technology solutions to automate tasks, improve communication, and reduce reliance on manual processes. This can assist in your headcount reduction

2. Implement and Monitor

• Develop an Action Plan: Create a detailed plan outlining the specific steps involved in implementing the chosen cost-cutting measures. Formal 100-Day Plans are helpful to focus the team on solving the problems that the model presents you.

• Communicate and Train: Ensure that all relevant employees understand the rationale behind the changes and are adequately trained on any new processes or technologies.

• Track Progress: Regularly monitor SG&A expenses to track progress toward reduction targets and identify any deviations from the plan.

• Refine the Model: Periodically review and update the model to reflect changes in business conditions, assumptions, or cost drivers.

3. Review the Model and Adjust

• Weekly Review of the 100-Day Plan: Conduct a rigorous review of the details of the plan to ensure progress is being made and the team is focused. Taking your foot off the pedal will slow down your journey to your goals.

• Monthly P&L review: Compare your actuals to the model in your P&L. Be aggressive in the actions and hold the team accountable to what they committed to do.

• Review the Assumptions in the model: There are times when you are going to struggle to attain certain goals within the model. Change is acceptable IF you can find alternatives that secure the bottom line such as looking at other categories that are better than forecast or new information is unearthed that can help. Do not blindly accept regression.

By following these steps and leveraging the appropriate tools, businesses can effectively deploy financial models to reduce SG&A expenses and improve their overall financial performance. Remember that continuous monitoring and refinement of the model are crucial to ensure its ongoing effectiveness.