With the current state of the economy, most Chatswood companies are cutting staff to reduce the cost of operation. However, letting an experienced employee go can save some costs but become costly in the future. For instance, you lose the knowledge accumulated by the employee and the goodwill the employee had with your customers and suppliers. After some time, you will incur the cost of hiring, not forgetting that the staff you cut off could benefit your competitor! Therefore, instead of cutting stuff, here are other ways you can use to reduce your costs:
Consider negotiating with your suppliers to get a better deal. If you have been loyal to the supplier and are unwilling to give you a better deal, consider shopping around. Remember, negotiating will save you operational costs and make it easy for you to avoid cutting staff. However, if you have an excellent supplier, do not be hard on them, although this does not mean you cannot shop around looking for better deals.
If you do not have a roster, you should create one. On the other hand, if you have one, you should check it regularly to determine if the staff are used effectively. Checking roster efficiency ensures you have the right team working at the right hours to avoid wasting valuable resources. For instance, if your business is busier on the weekends than weekdays, you can look at roster profitability, i.e., have two workers on Saturday and Sunday instead of having two workers on Monday and so forth.
Since you are looking to increase your profit, consider capital equipment. For instance, if operating and maintaining your equipment is costly, consider selling it, and leasing back. On the other hand, if you need specific software, you can get monthly subscriptions (which are cheaper) instead of buying a computer or the software.
Before you separate bad and reasonable costs, you need to determine your strategy. Usually, you need to assess your goals over the next 2 or 3 years. For example, if you want to grow your business and brand over the next two years, you do not have to cut your sales staff. However, if you’re going to create new brands, you do not need the sales team. Since businesses are different, it is up to the owner to determine the direction of his/her business. With such a strategy, it is easy to invest wisely. In case you don’t know how to go about it, consider seeking help from a Chatswood accountant.
If your business is not doing well, you can encourage your staff to take holidays. While doing this, talk to your team to take a mix of paid & unpaid leave to make things easier. However, be careful about how you structure these holidays to avoid affecting your business continuity.
Instead of cutting staff, reducing the number of hours or days, they work in a day or week is a good option. Companies adopt this approach because it saves costs while still ensuring the brainpower of your employees remains in the organization. When you reduce the hours or days of working, it maintains the employees’ morale because you did not fire them.
Small business owners need to ensure staff efficiency to increase return on investment (ROI). For instance, if you have a sales team, some salespeople should not spend most of their time following satisfied customers because they had a relationship in the past! Instead, they should spend their time looking for other prospects to increase sales.
Although this should be done regularly, it is essential to review all your operational expenditure to reduce the costs of operation during tough times. Some of the areas you need to evaluate include equipment and technology. For instance, if you have Fax machines, consider replacing them with scanning equipment, put your accounts receivable to e-payment systems, and target recruiting via social media or other networks you deem useful. If you do a proper review, you will cut operational costs and save time too. With the help of a Chatswood accountant, you can quickly review all your operational expenditure.
During tough times, landlords are also affected, and most of them tend to soften. The key to cutting deals is to start early. With landlords having a high vacancy level, they tend to attract potential tenants by offering exclusive deals. If you plan early in advance before your lease terminates, you have the upper hand to get a better deal.
If you want to be on the safer side, do not mix your personal and business finances. If you combine the two, cutting business costs is difficult. Remember, if you need the help of Chatswood accountant, explaining your assets and liabilities while you have personal finance and business finance mixed is a daunting task.
Since you are looking for ways to avoid cutting staff, there you have it. While some of these strategies might work in most businesses, you need to determine those that can work for you.
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