As someone who has built their dream job or made an entryway into entrepreneurialism, we can all realize that there are a lot of crosses to bear. One of the most agonizing aspects of running any business is having to cut business costs. It can feel that we’ve got to hack away at so many different areas of the business that it’s lost its identity.
And when we start to think about cutting the nuts and bolts of the business, namely the staff, this can be incredibly heartbreaking. But are there ways to cut business costs without having to get rid of our staff?
Make Alterations To The Roster
You need to see if you are using your staff effectively. Everybody might very well be working between the hours of 9 and 5 but this may not result in increased productivity. By making sure that you have the right staff at the right hours, there is little waste. You need to look at it from the cost per sale in relation to how much you pay for labor.
For example, if you are more successful on the weekends but you don’t have enough staff it makes sense to move some employees towards weekend work. This can cause some consternation within the ranks. And you have to remember that as an entrepreneur that you’ve got to make these tough decisions. If you are not prepared to quickly it is important to learn soft skills or conflict tips that can help you navigate this speed bump.
Negotiating With Suppliers
Do you have the best deal? You may very well have a good relationship with your suppliers but now is the ideal point to start talking to suppliers to get a better deal. The very beginning of the year means that people aren’t buying as much which means that you can use this to your advantage.
But it’s important to strike the right balance. If you have a good supplier you don’t want to force them into a deal because they may not be able to supply you adequately.
It’s always worth keeping your ear to the ground and testing out the market to see what deals are out there so you can negotiate a better one with your current supplier. It’s all about the age-old skill of haggling.
Reducing Working Hours
A very popular approach at the moment, when you want to harness your talent, putting full-time workers on part-time hours can be a great way to cut costs. While it is a sure-fire way to keep the right people in the organization, it can result in a few ruffled feathers.
From your perspective, it can help to maintain employee morale because you’re not letting people go. Implementing a job-sharing scheme can help to reduce the number of jobs while still keeping full-time coverage. Having two people work part-time hours that add up to one full-time job will make big savings.
But we have to remember that by turning 5 days a week into 4 days there may be a struggle with getting things done. You also have to remember that while people are happy to have a job, by reducing their working hours this could impact their productivity because they aren’t earning as much.
Improving Your Cash Flow Via Your Capital Equipment
Changing your mindset can prove beneficial. Remember it’s not about reducing the costs but it’s about improving the profit. You can do this by creating different methods of dealing with your equipment so you are able to create additional cash flow.
For example, you may want to sell the equipment and then lease it back. Cash flow can be a major headache with regards to incomings and outgoings but if you could learn the art of moving the money around you are going to be able to improve that cash flow and potentially reduce your tax.
For example, if you do not have the funds to purchase a piece of software outright there are many software programs that have moved to a subscription base. This gives you the opportunity to look at your monthly expenditure and monitor your cash flow better.
By keeping the targets up and the working hours down this could provide enough pressure to improve performance. Encouraging efficiency is one of those components that can be the equivalent of squeezing something too tight. If you apply the pressure too much it can have an adverse effect.
But when you start to look at individual areas of the business, improving efficiency doesn’t have to be about setting impossible targets. But if you can start to look at an area like sales and if people are only spending 70% of their time selling, if you can get that up to 80% this will have various positive outcomes. But this is all about taking the opportunity to test the waters to see how staff are coping with challenges.
Have You Been Putting Your Own Money Into The Business?
From a financial perspective if we can feel that we are able to put a little bit of money into the company to keep everything afloat there is no harm. But when we start to intertwine our personal finances with the business ones, this could very well cause personal problems.
We have to remember that if we continue to bail out the business each and every time we will become so involved with the business that if something goes wrong we could go bankrupt as well as lose the business. It’s about exercising discipline; you need to ensure that you are separating your personal involvement, right down to the finances.
As agonizing as it can be to cut staff out of the business, these methods can ensure that you reduce your costs across the board. Reducing our costs is maximizing profit rather than cutting back. This is a mindset that can certainly help us when navigating tough times. Because when we hit speed bumps we can start to worry that the business will head south afterward. But by keeping your team on board using these methods you should see an improvement.