In a situation where the number of customers and orders is plummeting, it’s time for any company to think about cutting costs. But do it in a way that does not cause serious damage to your business, customers, and employees.
Is it possible to cut costs quickly and painlessly? This is what we’ll talk about today.
Ways to cut costs quickly and efficiently
Rejection of the office
If your office doesn’t double as a warehouse, showroom, or point of sale, you can easily do without it.
First, office rent and maintenance are one of the most significant items among non-strategic expenses. Secondly, you would significantly save time (which they spend on getting to work and returning home) and employees’ money (lunches, coffee, etc.).
Of course, many businessmen are mentally unprepared for such an approach, fearing losing control. But why do you need employees who work only under duress and when they have a lead over their souls?
Think about management by goals (read Brian Tracy’s book “Motivation”), write down a strategy and step-by-step tasks for its implementation for each employee, use programs that allow teamwork, and track the status of each process and task (Megaplan, Bitrix, Trello, Basecamp). Tie employee salaries to performance and goal achievement.
After all, you are interested in results, right?
Outsourcing
If you have a lawyer on staff, then you bear the costs of his salary and the arrangement of the workplace. If your business does not need significant legal support, then you can safely refuse a lawyer and conclude a legal service agreement with a good law firm.
There are several advantages:
- If something goes wrong, you can always file a complaint with the company serving you, as well as apply penalties.
- If your company also provides services that a law firm can benefit from, you can simply arrange for a partnership and barter exchange. Thus, giving up unnecessary costs.
If your business is in the IT field, then everything is much simpler here. Having found a reliable experienced company, you can build your development team in weeks.
Percentage and bonus for completing tasks instead of a bet
Before switching employees from a flat rate to a %, you will need to familiarize yourself in detail with the functions and responsibilities of each employee.
If, for example, a sales manager or marketer can be given a percentage of sales and plan fulfillment, then this will not work with an accountant or client manager.
Calculate how many targeted actions the accountant performs (number of entries, preparation of reports, filing documents with the tax office) and set the payment for each action or for achieving the result.
You may find that you do not need an accountant on a full-time basis (especially for small businesses). Then you can safely offer him to work for you and run several more companies.
Refusal of ineffective marketing channels
In times of crisis, your main task will be to carefully analyze the effectiveness of each marketing channel. Look at the achievement of goals, ROI and payback period, and the number of potential customers.
Based on the received analytics, refuse unprofitable and unprofitable channels, and reallocate their budget to more effective ones.
Rejection of unprofitable clients
Clients also need to be able to fire. And the crisis, more than ever, is suitable for this.
Look at the clients who take up 80% of your time while bringing in only 20% of your profits.
Do you need them? Maybe you should focus on working with key customers and offer them a few additional services or products?
Just think, what would happen if you could free up 80% of your resource and give up customers who fool your head and spoil your nerves?
I am 100% sure that after that you would find a significant part of the costs that you can refuse.
Take a look at your suppliers
Your suppliers are just as affected by the crisis as you are. And it’s hard for them too. So, it’s time to turn your attention to them.
Think about which supplier your company is a serious and important customer of, and then reach out to them and ask for an additional deferral of payment and a discount. Many people are afraid of losing customers, so your suppliers will probably agree to make a concession to you.
And you, thereby, will be able to quickly reduce your costs.
Outcome
Reducing costs is one of the urgent tasks on the agenda of any entrepreneur. Many entrepreneurs take the easy way out: pay cuts, reduced investment in marketing, and poor quality. But, as practice shows, these mistakes are very painful for the company’s business and its profits. Use these tips in the near future and see how much the financial condition of your company has changed for the better.
About the Author/s
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.
