It’s an unpleasant reality of running a business – sometimes you’re going to have to cut costs.
You only have to look at the sobering examples of Holden and Toyota announcing they’ll take their car manufacturing operations overseas, which will ultimately see the loss of hundreds of jobs.
When your business is facing financial strain or is simply not making as much money as it used to, cutting costs is inevitable. And sometimes that will mean having to let employees go. But what measures can you consider before having to go with this last resort?
Are there unnecessary costs?
When talking about unnecessary costs, we’re referring to anything your business pays for that it doesn’t necessarily need to. An example would be how big businesses may run a cafeteria or hire an external catering company to provide food and beverages to employees.
While a cafeteria can bring in profits, it is worth weighing up whether the cost of running such a service is being justified by a notable revenue stream.
This can be a tough call as an in-house cafeteria could lead to the loss of valued employees, but if you’re hiring an external catering company that is simply costing you money without any real return, then perhaps you’ll need to consider whether you can truly afford it.
Some businesses may absolutely need catering services (such as the mines), whereas others could survive perfectly well with your employees bringing in their own food or going out to lunch.
Other unnecessary costs could include yearly upgrades when you could change it to every two years or even the simple costs that occur from…
…keeping your electronics on 24/7 – it is not needed
While you should definitely keep your computers, printers and other electronics on throughout the working day, do you absolutely need them on when you’re out of the office?
As long as your computers are relatively up to date, booting them up in the morning will, at worst, take one or two minutes. Once on, they’ll perform just the same as always.
When you have an office space where your computers are staying on anywhere between 12 to 16 hours while no one is there, that is effectively 12 to 16 hours worth of electricity being needlessly used. Such usage is only going to escalate over the weekend.
Yes, your electronics may go into power saving mode during this time, but it’s still more
electricity being used than if you simply turn everything off while gone. Turning electronics off is also beneficial for their longevity.
Routers can sometimes encounter problems when never being turned off, and the key way of resolving such issues is through turning them off and disconnecting them from power outlets – it removes the build-up of static electricity and allows your router to properly reset; this is known as power cycling.
If you manage to do this more often through turning off all electronics when they don’t need to be on, you’ll find it will help both financially and in terms of giving your electronics a longer life.
The best way to encourage such a mindset is by teaching your employees about the benefits of cutting electricity costs and how it will help your business be greener and have a more positive influence on the environment.
Productivity matters to any good business, not only in terms of reaching goals but also in terms of gaining customers and clients that will help keep your business in a financially positive standing. If productivity goes down, this can affect profits and, consequently, your business’s financial well-being.
While you can cut costs by removing unnecessary internal factors and cutting back on electricity usage, a big way of addressing financial issues is by finding out where your business’s productivity is falling short. Ultimately, this could be through assessing whether any of your employees are slacking off on the job.
If your business is failing to meet deadlines which, in turn, is costing you customers/clients, then you need to find out who is responsible for these operational shortfalls. A lazy employee hurts you financially in two ways:
1. They’re failing your team in meeting deadlines and costing you paying customers/clients.
2. You’re giving them a wage that, in itself, is costing you thousands each year.
There is nothing more problematic than an employee taking advantage of you while genuine, hardworking employees suffer. So it’s important to take the time out to examine your business as a whole and investigate any troublesome employees.
If they show no signs of looking to improve to be worthy of actually earning their wage and getting you new customers, then they are a liability to your business.
It’s always better to find out if the cause of your financial struggles is a couple of troublesome employees instead of having to blindly fire your good employees, regardless of whether they’ve been with your for years or a few months.
Cutting business costs is a tough predicament to be in, but just always remember you have several more ethical options at hand before having to resort to firing employees en masse or shutting your business down altogether.
Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.