As you well know, starting and owning your own business is expensive – rent, labor, insurance, etc. It all adds up. And in times of economic uncertainty, cutting back is likely high on your to-do list.
The question though is, can you do so without cutting back essential services?
Cutting employees might seem like a good way to trim your costs, but the fact is, laying off staff comes with its own set of problems - among them, a possibility for reduced productivity, loss of morale, loss of operational knowledge, and potentially, loss of customers.
The point: Business owners often say their most valuable asset is their employees. And most mean it. If that is true, what makes the most sense right now is retaining that asset and getting creative by cutting elsewhere and in unexpected places.
Here are three ways you can cut the fat without gutting your business and laying off staff:
Reduce hours and adjust schedules
In Portland, Ore., there is a beloved store called Kitchen Kaboodle. When the Great Recession hit in 2008, business fell off a cliff, and the owners were faced with tough choices: Close or fire almost everyone.
In the end, they did neither.
Instead, for the next few years, the store went to a shortened schedule, staying open only on Fridays, Saturdays and Sundays. Ideal, no, but no one was let go and the store eventually came back stronger than ever.
So yes, one way to lower payroll costs is simply reducing hours. Offering full-time employees a part-time position is a win-win for everyone when the alternative is not having a job at all. Most people would rather work with their employer than lose all their income.
For you, it provides your business full coverage, though with a reduced staff, for a part-time budget. Ultimately, this method also provides that your seasoned staff members can have job security and your customers can have the service you are committed to.
Another method for reducing costs is optimization of business hours. If you are open 8 hours a day, 7 days a week, you might not be using your time and money wisely. Instead, have a smaller staff for slower days, and a full staff for the busier times. If some days are not profitable at all, do what Kitchen Kaboodle did and consider closing those days.
Improve operational efficiency
The next option is to consider how your business can operate more cost effectively while maintaining - or even improving - its efficiency.
This can look a few different ways:
- For one, you should call suppliers and renegotiate your contracts, looking to pay less for your supplies. No doubt that today, vendors will be willing to have that conversation.
The coronavirus is an opportunity for your business to be hypervigilant in its own practices. In tough times, a little goes a long way, and either renegotiating with your suppliers or reforming in-house policies and behavior can save costs in the long term.
Time to get creative. Instead of continuing to use that high-priced marketing consultant, consider bringing marketing and advertising in-house. Find out who on your team best knows social media and unleash their creative powers. This option will cut costs while still providing your business some much needed marketing muscle.
Or what about that basement space you’re using to store old items? Instead of letting the space go to waste, perhaps try to clean it and sublet it out to another business who could use the discounted space.
Bottom line: Each new crisis will end at some point, and you will be glad you kept the band together to make some new, beautiful music when the time comes.
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