Need for cutting costs?
Over the past 6 years, I have worked in, lead, or provided consulting to numerous organizations in this situation—including manufacturing companies, professional services firms, high-tech start-ups, and retailers. My experience shows that cost-reduction opportunities follow similar patterns virtually everywhere. This article may not solve your entire problem but it should give you a substantial jump on it.
As you begin your quest for cost savings, keep two key points in mind:
First, forget about solving your problem in one go. There’s no ONE solution. Instead, you should plan to reach your goal with a combination of at least a few actions.
Second, the degree of organizational disruption caused by your moves will usually be proportional to the degree of cutting you do. So you should tailor the reductions you pursue to your savings goal. Minimal impact ideas allow you to trim up to 10% of costs. Redesigning or reorganization ideas have a moderate impact on the team and can help cut expenses by up to 20%. Cross-department ideas are usually cut expenses by 30% or more, but those ideas disrupt your firm.
#Reduce work hours or wages
Instead of firing employees, you could offer part-time work to your full-time staff to save costs. Impose a small salary cut across the board. Be fair and cut wages from top-down, including your own pay.
That’s great when the employment contract allows it. But even if the employment contract permits doing so, it is a good practice to discuss such changes with your staff before implementing them.
You can restructure your business to make optimum use of the human resources you have. Redistribute the staff in areas with more work.
#Sell equipment and assets you don’t need
Assets that are too expensive switch with cheaper options. Sell outdated stuff, fancy devices and assets that you don’t use.
#Opt for a virtual office and switch to remote work permanently
This one strongly depends on the type of business you run.
Few more ideas?
You can extend unpaid holiday or vacation time pay for employees.
Offer four-day workweeks.
Cut overtime pay.
Reduce employee travel expenses.
Limit your purchase of new office equipment and supplies.
Freeze your hiring efforts.
Move employees to positions with lower pay.
Ask for employees to volunteer to take a temporary layoff. This will give them the opportunity to travel, spend time with family, etc. Some people would really like that.
And also boost employees for thinking:
Provide Information to ensure that your employees understand the challenges in the company.
Employees may discover ways to cut costs or make savings. So not only encourage them to be savvy on generating costs but also encourage employees to offer financial suggestions.
And one more thing, while cutting, reducing… don’t forget to execute on ideas which will help you make more sales and grow the company.
I can’t count clients who were sitting and waiting for customers to come while their business was drowning. They were sleeping on hot leads of potential clients. They didn’t follow up on previous clients, on people’s questions and requests.
So first and foremost I would advise you to really get to WORK!