Reducing costs is one of the immediate tasks on the agenda of any entrepreneur. Many ask themselves the same question: how to quickly reduce costs without harming business, customers, and employees?
Many entrepreneurs choose the easiest way: salary cuts, reduction in marketing investments, deterioration in quality. But, as practice shows, these errors are very painfully displayed on the company and on its profits.
There are many effective, fast and safe ways to reduce costs.
Ways to Cut Costs
1. Refusal of office
If your office does not serve you as a warehouse, exhibition hall, or place of sale, then you can easily work without it.
Firstly, office rent and maintenance is one of the most significant items among non-strategic expenses. Just count how much you would be able to improve your financial situation if you remove all expenses for rent and maintenance of the office.
Secondly, you would save a lot of time (which you spend on getting to work and returning home) and the money of employees (lunch, coffee, etc.).
Many businessmen immediately have the first question: they just will not work without my control? But why do you need employees who work only under a stick and when they have a leader above their heads? Dismiss them!
Write down a strategy and step-by-step tasks for its implementation for each employee, use programs that allow you to work collectively and monitor the status of each process and task. Link employee salaries to results and goals.
Outsourcing is the second way to significantly reduce your costs. For example, if you have an accountant in the staff, then you bear the costs for their salary and arrangement of the workplace. If your business does not need substantial support, then you can safely dismiss an accountant and subscribe an agreement for supporting with a good accounting service.
There are several advantages:
- If something goes wrong, you can always file claims to the company serving you, and also apply penalties.
- If your company also provides services that can be useful to an accounting service, you can simply agree on a partnership and barter exchange. Thus, you get rid of the extra costs.
3. Percentage and Bonus for Completing Tasks
The third way to quickly and safely reduce costs is to transfer employees from a flat rate to percentage. But before you do this, you need to thoroughly familiarize with the functions and responsibilities of each employee.
If, for example, a sales manager or a marketer can receive a percentage for sales and plan fulfillment, then with an accountant or client manager this will not work.
Calculate how many targeted actions are performed by an accountant (number of postings, preparation of reports, filing documents with the IRS) and put payment for each action or for achieving a result.
4. Refusal of Unprofitable Customers
You also must be ready to dismiss customers! And the crisis, more than ever, is suitable for this. Look at customers who take 80% of your time, while bringing in only 20% of the profits. Do you need them? Maybe you should focus on working with key customers and offer them some additional services or products?
We are 100% sure that after this you will find a significant part of the costs that you can refuse.
5. Check out All Non-Strategic Expenses
This is the easiest way to quickly reduce the expense of your company. Analyze what the company’s money was spent on in the previous months.
Buying coffee and cookies, office expenses, consumables, calls for personal issues from the work number – all this can be safely cut down and not reduce employees motivation. Just tell everyone that the budget will be cut by 50% next month, and make your someone responsible for it.