Unfortunately, business expense reduction is not an overnight process. However, with thoughtful planning and a long-term focus, you can reduce costs without sacrificing or affecting the normal functions of your business.
With the potential for a recession, increased interest rates, reduced bond rates, and more, the economy (and your business) is in flux. Read on to learn about tracking expenses, valuing time, and growing your business.
Consider the “fat vs. muscle” approach with your business expense reduction strategy. Removing some fat is OK since it is not as sustaining as muscle. However, sometimes muscle also has to be trimmed. If you’re unsure how to balance expense control with the need to maintain the business in the future, consider which parts of your business are muscle and which are bone.
A high-profile office is impressive, but you might only need a first-floor office for your skeleton crew. You might want your most qualified employees on site every day, but you need to have motivated employees who have a work-life balance and have become accustomed to working from home. You will pay a premium for the penthouse and a premium for qualified and motivated onsite staff.
Often, examples are a great way to understand the value of a strategy, and no example is more relevant than COVID-19 and shifting workplaces.
Over the past few years, companies have effectively reduced costs by letting employees work from home. This saves on work footprints and the associated expenses of heating, cooling, cleaning, and maintaining a physical office. The reduced garbage, maintenance, and utility costs cannot be overlooked. However, there is likely a considerable loss of productivity that should be considered.
Cash flow management is essential at any company growth stage—more money in, less out. However, not all money out should be reduced. Consider marketing, sales training, and morale-boosting programs. Most of these programs show returns within a year, so the effects of an immediate cut might not be seen for up to 12 months.
Here are ways to look at your organizational health as you consider your business expense reduction:
There is no one-size-fits-all approach to reducing your expenses. Every business is unique and requires different solutions. Further, you cannot permanently “save” your way to success — making money takes money. Business expense reduction is smart when there are expenses to cut — not when they generate revenue.
If you’re wondering how to lower business expenses, consider these tips:
A promising sign of organizational health is a healthy balance sheet. “More money in, less money out” is a great motto. However, you cannot move to a zero-spend model without sacrificing your long-term business. For more help on how to lower business costs, contact us today for small business coaching. Click here to sign up for my free weekly blog articles.
Coach Dave
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