Businesses go through peaks and troughs in the form of good and bad years. While it’s always desirable to stash away savings either in the business or personally when the good times are rolling, usually a little personal excess and overexpansion in the business can drain much of the upside. Then when the inevitable bad times roll in, this is when you begin to struggle.
Most companies will make staff cutbacks, but smaller business have fewer options in this regard. Cut too deep and their ability to provide the current level of service diminishes. Clients may notice and leave, so it’s necessary to find clever ways to cut back without causing an exodus of clients in the process.
Here are 4 ways to reduce costs and manage a short-term decline in sales.
Cut Office Supply Expenses
Most companies have too many supplies on-hand at any given time. This usually means that they can stop ordering certain items that they’ve got a 6-month or longer supply of sitting in the stock room already.
Beyond that, look to centralise your ordering with a single office supplier like Staples or a lesser-known brand that offers better discounts. It pays to shop around and avoid rushing out to find local supplies when running out of an essential item. This increases expenses unnecessarily.
Use a spreadsheet to list all the items needed. Then seek out the best prices to see how much can be saved by paying more attention to details.
Reduce Staffing Expenses
Look for ways to reduce hours temporarily. Start by stopping all overtime. Overtime isn’t efficient, costs more, and results in tired workers.
Then look at all new recruitment closely to see whether the relevant department can function without bringing in a new person. This can be done by consolidating two positions into one or splitting the previous person’s responsibilities between two other employees. The cost of increasing the salary of the two people is going to be cheaper than what a replacement employee would cost the company.
Scale Down the Office Space
If the sales decline is expected to be a semi-permanent one and not just a temporary lull, then consider either scaling down the office space by sub-letting part of it (if the lease agreement permits it), renegotiating the lease, or planning to relocate to a small space once the lease is up.
When scaling down the office space, switch some employees over to remote workers where they work from home. This eliminates the need for the office areas that they occupy, plus some associated costs like heating, lighting, furnishings, etc.
Reduce or Forgo Your Salary for a Few Months
As the owner of the business, you could delay your salary or reduce it until the business can afford it again. This would allow fewer painful cutbacks in the interim. Taking out one of the loans bad credit lenders like Loan Pig which are available for up to 12 months can bridge a gap when personal savings aren’t sufficient. This also avoids needing to borrow against the company which is difficult for small business owners to do.
Weathering a business storm isn’t as difficult or as long-lasting as most founders fear. Just get your head down, do what’s necessary, and you’ll likely emerge on the other side.
Community manager at Visual Contenting. Jacqueline loves to talk about social media trends, new technology and how they help businesses accelerate their marketing efforts.
