The business environment is challenging right now, and as we kick off Global Money Week (22−28 March), it is vital that people and younger individuals are financially aware and equipped to make sound financial decisions.
With revenue lines bashed up by the pandemic, many leaders are having to make tough decisions to keep their businesses competitive. Cost-cutting is a possible solution. By taking ownership of the things you can change, you’ll give your business the momentum it needs to emerge from this difficult period stronger than ever.
You have two options: cut essential expenses or, somewhat counterintuitively, spend money to save money. Let’s explore both options.
Back to basics
Getting small cost-cutting wins right away is a great way to build the momentum you’ll need to tackle the bigger rationalisations. Start by making a list of your business’s variable expenses. Then, be ruthless about what you really need and cut the things that won’t impact service delivery or negatively affect employee morale.
Then, reorient your business around the things you’re good at. If you have projects or initiatives running that you’re unsure about, put them on ice and redirect that expenditure to high-impact, core projects. Alternatively, you could use the money you save to bolster your balance sheet and cash flow.
If you don’t ask, you won’t get
Just as your customers might be looking for discounts, bargains, or payment holidays, you, too, can negotiate pricing with your suppliers. Rank your fixed expenses from highest to lowest and target those near the top. If, for example, half of your team work remotely – and will continue to do so – you could probably downsize your office space and reduce your rental expense.
- Other things you could negotiate include:
- Leases on everything from printers to manufacturing machines
- The speed of your fibre connection, especially with people working from home, and
- Your software service – shift from on-premise solutions to cloud-based accounting and payroll solutions for instant savings
- Look to technology
Advanced business management solutions give employees direct access to their information, eradicate time-consuming back-ups and provide mobile, real-time access to business-critical information for improved decision-making. They significantly reduce the workload on small and medium businesses’ HR departments, allowing them to tackle more important tasks, like improving employee engagement.
Other technologies that could help you take control of your costs include:
Customer relationship management (CRM) software: Reduce the cost associated with lost invoices, neglected clients, and wasteful marketing activities.
Teleconferencing software: Reduce costs associated with employee travel and workspace needs by enabling them to work remotely.
Energy-saving technology: Reduce your energy bill by installing PV solar panels, get an energy audit to identify wastage, and install energy-efficient lighting and appliances.
Brainstorm with your team to identify the areas of your business where technology can take over mundane, rote, or admin-intensive tasks so that they can focus on the projects and activities with the highest potential impact.
And clearly communicate your cost-cutting plans to your team and encourage them to take ownership of cost-cutting measures in their area of the business.