Everyone dreads the words “cost-cutting.” When your business butts up against the realities of inflation, higher labor costs, and shrinking demand, it’s time to make some hard choices about your finances. How can you cut costs without shrinking your business? The answer is simple: you need to find what isn’t working and get rid of it.
Find the places where you’re spending money that doesn’t come back as revenue for the company. Maybe you’ve been printing out notices that could have been posted digitally. Or, maybe you’ve been using your employees’ time inefficiently. Before bringing people in for a meeting, ask yourself: could the content of this meeting just be an email?
The less time and resources you spend on tasks that are simply habitual, the better. If you’re in the business of making money, don’t spend all your time in meetings and fussing over specific protocols. Pile your resources into things that make your business profitable.
Does your business really need new workers, or do you need to expand your existing employees’ scope? Talk to your employees who want more responsibility and offer them a raise to take on more job duties. The raise you give them for tackling these new tasks won’t be as expensive as hiring and training a new worker!
It’s critical that you don’t just pile work on a few people, though. You also need to make sure you give appropriate raises to employees who take up more responsibility. If people feel like they’re being punished with more work simply because they’re better at their jobs, they’ll stop working as hard. You can imagine how bad this dynamic can be for your bottom line.
There’s nothing wrong with cutting products or services that aren’t making their money back for you. If you’re looking to increase your margins, try carrying fewer items that eat into your overhead costs. High-ticket items that eat up shelf space but rarely move are far from ideal when times get tough.
Likewise, if your business offers a service that requires highly specialized and expensive talent, but that service isn’t pulling its weight, it might be time to cut back. Break open your company’s financial reports and get to the bottom of which products and services are making money and which need to go. It can be hard to make these cuts, but they’re often the best call for a business that needs to tighten its belt.