COVID-19: The Best Ways to Cut Costs

Conducting any business gets costly over some time. This is because we tend to build up some costs which we think are necessary. The reality could be that we can achieve the same output at half the price. Then we bring in management gurus to tell us the same thing and pay them lots of money to do so when all we had to do was to take a fine-tooth comb and go through all our expenses and decide for ourselves what is necessary and what is not.

So today, let’s look at what we can do to bring our costs down in the current scenario so that we can remain profitable in spite of all the difficulties.

Bring down the rent burden

When we are running a business, any cash is welcome so that you can use it for day to day expenses and tide over a crisis. So say you have been paying a considerable rent for your office. Maybe you can ask the landlord to give you some credit. You can pay the rent at the end of three months. This will give you money for working capital during this tough phase. Or you can tell him, you will not default on the rent, but maybe he can extend the lease by three months for free. He may be so happy that you are not defaulting that he will agree since he is going through a cash-crunch.

Do you need large office spaces now?

Everyone has realized the benefits of working from home today. For you, it could mean lower overheads of running the office. But what if you don’t need an office at all? Or can we do the same amount of business with smaller office space? After all, money saved is money earned. And technology has advanced so much that working from home is no longer difficult. Think about it.

No need to cut jobs

The first thing many people in business think about challenging situations like this is to cut jobs. But this is unnecessary in many cases. There may be so many other things you can do besides firing staff. Explore all those avenues before you decide to reduce staff. If everything else fails, maybe you can ask employees to take a pay cut so that you can retain all of them, which is a better decision than asking some of them to go. I am sure they will support you in this, and even thank you because you are not firing anybody.

Cut unnecessary perks

Sometimes we give employees extra benefits so that you can convince them not to change jobs or just to make them more comfortable. These benefits can be curtailed in this challenging situation. Maybe you can assure them that the benefits will be added back once the crisis is over. Traveling expenses or entertainment expenses are two examples of additional benefits right now, so maybe you can do away with that.

Cut down on advertising

If you are spending on outdoor advertising, maybe you can relook at that expense. Today, all outdoor advertising may be useless because people are not traveling at all. That is a considerable spend which can be cut down drastically, saving you a lot of money.

Ask employees to cut down expenses and incentivize them

There could be many expenses that your employees feel are unnecessary. Ask them to suggest what can be cut down. And give them a percentage of what they have saved to reward them for their suggestion. You will be surprised how much you will save with their help.

Thank you for reading this post, should you have any suggestions or feedback, please feel free to share your thoughts in the comments below.

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