February 1, 2012
Like the previous blog, this is intended to provide some ideas for cost saving measures in business. Too many times we have seen companies not adjust with environmental or economic conditions. Every option should be analyzed as one cut here, could be devastating to another unit over there. Some of these measures could be temporary until the climate improves, while other measures may be necessary for long-term survival. As always, weigh your options carefully. Here are some additional considerations for budget reductions:
Information Technology (IT) Reductions
As you may know, every person, every cubicle and office may not need devices. Sharing peripheral devices, such as printers, is the way to go, linking in all computers around the office to a common device. Many organizations and businesses have moved to laptops and docking stations, instead of buying desktops and laptops for each employee. Ensure you company has developed standard procedures for IT acquisitions, replacement, repair, and decision making. Request for Proposal processes will allow your organization to benefit from low cost providers.
Carefully weigh your options when it comes to printers, as some of the commercial models can cost you hundreds of dollars a month.
In times of financial difficulties, travel may be discretionary. You will need to assess the pros and cons of travel to have meetings with clients, partners or staff in your business against lower cost video or audio conference calls. Can you temporarily afford to move to having conference calls instead of travel? The answer in some cases may be yes. We have known clients that have saved $5,000 in travel costs per quarter per traveler.
Marketing and Advertising
In tight economic times, consumer spending will be down, along with consumer exposure to advertising (ie: buying less, entertainment outings may be decreased). Be smart about your advertising placements. This doesn’t mean the complete elimination of your marketing budget, but to use the marketing dollars wisely. If you have done accurate reporting on marketing activities you should have a track record of the best Return on Investments (ie: increased revenues and profit through the costs of each marketing activity).
Wherever possible, you may want to partner with another company and conduct some joint marketing and advertising. You may gain access to partner resources to assist in your efforts, such as access to another company’s marketing manager, or to piggy back on existing marketing and advertising avenues.
Client Perks and Benefits
If you have been rewarding clients, this may have to be temporarily discontinued until a more favourable environment. Whether you consider this to be a necessary marketing expenditure to keep a client, or as one of the add-ons in your goods & services package, you may need to eliminate all or part of the benefits and perks, or it could have a significant impact on your bottom line. Are the slim resources for perks and benefits to the client or for you to survive? Like all measures, analyze these options with caution, as a lost customer through financial restraint measures is lost revenue.
Employee Perks and Benefits
The larger your staff size, the more costly the perks and benefits can be. It would be a good idea to keep essential benefits intact such as medical, dental and retirement savings plan program benefits, but perks such as free memberships or discounts on items the company must pay for could be eliminated.
If you are in the realm of cutting costs, implement with caution and always monitor the impacts and results frequently. Revise if necessary if the impacts are too severe. Through your diligent measures, your financial picture will become healthier, and your business will be in a better position to be more profitable when the economic climate become more favourable.
© Strategy Plan One 2012
Business information, resources and tips for the entrepreneur