When things go tough, business react by cutting costs across several key areas. Sometimes even though you may save your business some money, some of the spending changes you make will affect your business adversely.
If you are running at a loss in your business what do you do to reduce costs? That’s the big question every business owner faces at one time or the other. Now if your business is not doing well don’t react too recklessly lay cutting down on costs indiscriminately.
While there may be no perfect approach tackling your cashflow problems here are some ritual strategies to help you cut your costs effectively without affecting the overall growth of your business.
• Don’t Cut Workers’ Salary Unless You Cut Yours Too: all over the world employees are always the first casualties of harsh economic times. Companies sack workers in thousands at the slightest sign of financial trouble. Wages & salary reduction are also accepted ways of reducing money problems. It may be wise to reduce your staff strength from say 12 to 8 if you are experiencing hard times but before you do that show honour & example by slashing your own salary as the CEO. It doesn’t send the right signal when you and other senior officials in your CEO keep fat salaries in the face of financial difficulties in the company and choose to cut low and middle several workers salary in half.
When you reduce your salary along with their own, your workers will feel the pinch but will be encouraged by the fact that you are sensitive enough.
Remember you’ll be counting on the creating and handwork of your people to lift your business out of the hard times, so don’t treat them like shit.
• Don’t Stop Marketing: it is a stupid thing to consider stopping or even drastically reducing your marketing activities when things are difficult for your business. One of the things you should even start doing harder during difficulty times is marketing, more strategic marketing. Always keep trying to come up with a better offer on your products and services. Think of less costlier ways to market your products or services more.
The only good thing you may do is to do away with costly marketing and find cheaper, effective ways to attract the right prospective clients and customers. To stop marketing entirely is a No, No.
• Review Your Fixed Costs: if you are a starting business or are experiencing financial difficulties, one of the ways to start getting your finances in shape is to review your fixed expenses and cut away irrelevant expenses you make monthly, weekly or even daily. If you don’t need regular workers and can’t afford paying regular wages then hire part-time and freelance.
Rent, Salaries, Subscription etc are among the most costly fixed expenses business make. Try to reduce them if you can without hurting your business. Buy raw materials and other stuff for your business only when you need them. That way you make sure you spend only when it’s absolutely necessary.