Running a tight financial ship in any business can help ensure you aren't wasting resources and help you maintain a healthy bottom line. Cost cutting can be a necessary function if your business is experiencing slow revenue generation. It can also be a good overall budgeting technique to protect against cost overruns and unnecessary expenditures and to develop overall lean operating strategies.
Staffing needs for a business change over time. Periodically evaluate whether you can combine positions and eliminate roles, thereby saving money. Look for redundant positions, such as two or more people performing the same job functions that can be efficiently performed by just one. You may also find it more cost efficient to move some positions from full time to part time, contract or even temporary roles to cut staffing costs even more. Another option is to temporarily reduce work hours, shorten work weeks or ask top execs -- including yourself -- to take pay cuts.
Downsize Space and Equipment
When it's time for a lease renewal, ask your landlord to renegotiate and lower your rent or consider the benefits of downsizing to help cut costs. Moving to a different location, a smaller facility or a more energy-efficient location all have the potential to reduce your operating overhead. Sublease unused space or use it for storage and eliminate storage facility fees. Efficient use of space in an office or retail facility can also help you do more with less. Consider converting large offices into partitioned work areas and creating shared workspaces to help maximize efficiency. Compare costs for leasing rather than buying equipment as well.
Gourmet coffee in the break room and a staff lunch on Friday afternoon may be good morale boosters, but if business finances are tight, cut costs by eliminating these nonessential expenditures. Slash everything not vital to operating your business. Compensate your employees by holding occasional potluck events, rewarding staffers who bring in new cost-cutting ideas. Assure workers that your cutbacks are designed to keep the company operating lean enough to ensure the company's longevity and the protection of all jobs.
Make Budget Cuts
Go through your budget line by line and look for ways to reduce costs in all categories. For example, cut energy costs by installing timers on lights, switch to energy-efficient office products when possible and buy materials or products in larger quantities to get bulk discounts. Renegotiate vendor contracts for better terms or bundle services, switch to less expensive brands of office supplies or start holding teleconferences rather than in-person meetings to reduce transportation costs. Go paperless and shop around for the best rates in financial services and insurance. For every line item on your budget, consider whether the costs could be reduced or eliminated.
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