If you could reduce costs in your business without cutting your value or service, how would this impact your business sustainability through a downturn or unexpected, uncontrollable change?
With COVID still lurking around the country and no signs of a solution that might put an end to the pandemic, uncertainty continues to impact most business owners. On the up-side, the economic impact of the pandemic is providing most of us with an opportunity to delve deep on our quest to reduce costs: to look at exactly where our hard-earned profit is going, probably unnecessarily or unknowingly.
When I work with clients to review their overheads or admin costs, I like to think outside the box so that we’re not just cutting out or reducing particular expense items, but working on ways to get the team on board and use their ideas to look out for alternatives within their own department. This can be either from a process improvement angle or cost reduction angle.
To help you on your quest to cut costs, here are some practical suggestions:
- Use your accounting system to review all your expenses and drill down into the details to reveal why some expenses may be so high. Ask your team for ideas around sharpening these expenses.
- Do you have any unknown costs within your expenses? Have your accounting system set up properly so that it will report accurately on expense items. This will give you some pretty interesting ideas about where your costs might be blowing out.
- Provide budgets or spending limits to team members and use monthly reporting to monitor and gain control over any miscellaneous spending. Put team members in charge of their budgets to give them ownership of the achievements.
- Shop around for volume discounts or cheaper, yet sustainable, alternatives. There’s no harm in asking.
- Are there any ways to be more productive within the business? Is there an opportunity to combine departmental resources with overflow capacity or create additional administrative efficiency?
Sometimes, the hardest choices are the ones that make the most impact on a business, including cutting unnecessary comforts, restructuring human resources and managing internal and external expectations. However, these are the ones that will keep your business alive during uncertainty.
If you would like to brainstorm ideas on your quest to reduce costs in these uncertain times, email me at firstname.lastname@example.org.