In “normal” times, businesses often face the challenge of reducing expenditures while maintaining efficiency and productivity within their business operations. As we have noted before, “excessive costs—which also detract from funding new customer acquisitions or product upgrades—often perpetuate themselves, making it very difficult to pull the plug” later on.
But since these times are anything but normal, it might be a good moment to look more closely at business expenses and seek to trim the budget in advance of a return to normalcy. The benefits resulting from this effort include:
- Lessening the possibility of serious cash-flow problems at a later time
- Having more funds available for expansion and/or product upgrade plans
- Boosting your company’s profit margin
- Enabling you to offer customers a discount on pricing (a key differentiation factor)
Here are action steps to contemplate as you prepare to resume full-scale operations:
Cut back on business travel
Chances are, business travel plans for your organization are already severely reduced or even eliminated. But as conditions ease, it’s tempting to fall back into accepted practices. Why not take this opportunity to examine the benefits of digital and video technology to achieve the goals once exclusive to business travel, such as conferences or client presentations? This type of expense may be considered superfluous in the months and years to come.
Reassess equipment needs
In many cases, a business doesn’t require state-of-the-art equipment for all of its operations. Look into refurbished office and warehouse equipment that may suit your needs (while, of course, determining the quality of equipment being considered). It’s also important to recognize that virtually all equipment and technology is likely to wear down over time. Instead of waiting for equipment to break down, allocate resources for valuable preventive maintenance and minor repairs. Holding off “until a major malfunction occurs will invariably cost more money than your business can afford.”
Outsource technology functions
Speaking of equipment, what options are available to offset the high cost of purchasing for your business? Technology and software often involve additional expenses (with respect to technical support personnel and/or server administrators). Look into outsourcing IT services so as to decrease staffing costs, gain access to valuable apps without paying licensing fees, and eliminate the need to constantly update IT equipment (a responsibility assumed by your third-party service provider.
Explore flexible scheduling opportunities
As we have all learned during the pandemic, maintaining a full staff onsite eight or more hours a day is no longer the best or most feasible option. If you haven’t done so already, now’s a great time to explore ways to incorporate flex-time and telecommuting. Employees who work remotely don’t incur workplace-related expenditures such as utilities and rent. You could be looking at sizeable savings by supporting efforts for your employees to work from home.
Ask employees for cost-cutting ideas
Not all great cost-cutting ideas come from senior executives. In many cases, front-line staff may have a wealth of potentially significant suggestions for reducing expenditures. The key is to incentivize employees to come forward with these suggestions. It’s up to management to communicate this organizational priority and publicly reward the best cost-saving suggestions.
Re-examine your current vendor arrangements
Businesses often “lock into” long-term relationships with the same supply chain vendors. Years may pass without any reassessment of what those relationships entail, and at what cost. As Business.com suggests, “if your market or niche has grown in the time you’ve been in business, you may find that there are more options than were there when you initially opened your doors.” Think about approaching your current vendors “about renegotiating your contract” and see if “they may be willing to offer discounts or add-ons” that end up saving you money.
Find out how TAB can help your business during these challenging times. Get valuable tips and insights at our COVID-19 Resource Center.