The current economic climate could best be described in two words: fear and uncertainty. Fear is often accompanied by a heightened sense of panic, which can lead to some questionable decisions. As a business owner, your customers, employees, vendors, and more depend on you to remain calm and collected during times of instability.
In this article, we advocate for business owners to take a step back, analyze each line-item of their operating expenses, and make sure their balance sheet is prepared for the worst-case scenario. Here are some tips to optimize, reduce, or eliminate your current liabilities:
1. Leverage High ROI Marketing
In times of crisis, it can be easy to look at your marketing expenses as the first weight to cut, but you shouldn’t use a slash and burn strategy for your marketing budget. Instead, look at what marketing strategies, campaigns, channels, and more are performing well from a return on investment (ROI) point of view.
If, for example, you are spending equal amounts per month on Google search ads and social media branding campaigns, before cutting either or both, consider how they are driving real results. If your google search ads continue to garner real sales and you are finding it hard to measure the impact of social media marketing, it can be an easy decision to cut your investments in social media while continuing to invest, if not double down, in search ads.
2. Reconsider Expensive Office Space
One thing many businesses are realizing is that their workforce can still be productive remotely. Consider the quarantined period as an involuntary test for transitioning to a distributed workforce.
If your business still depends heavily on face-to-face communication, and video conferencing is not ideal for your collaboration needs, instead consider a desk-sharing or co-working space format for your office space. This can save most businesses thousands of dollars (if not more) in real estate expenses every year.
3. Utilize Your Human Resources
Layoffs are the absolute worst-case scenario for most businesses and unfortunately, in times of crisis, they are inevitable as funding, liquidity, and revenue dry up. One way to ensure your company is operating effectively is to make sure every employee is utilized at full capacity.
This means being very cautious when hiring to make sure each and every new hire has a full plate, or close to it. Although difficult to achieve balance, it’s recommended that current employees remain slightly over-utilized in order to prevent a large under-utilization when new employees are hired.
When considering each new hire, it’s also recommended to think about how contractors and freelancers could be better leveraged to gap-fill your requirements. This is especially important for one-time projects, new research and development projects, and more.
4. Recalibrating to New Normals
As we continue to navigate the new global economy, it’s important we recalibrate our expectations and financial plans. Economists are predicting a recession with near certainty, and the possibility of a depression that could even surpass the depths of the Great Depression of the 1930s.
Business owners must learn from this time and understand the importance of sound financial planning and the need for a safety net. The unfortunate reality of the Fed’s involvement in economic downturns is that businesses have grown complacent with the need to prepare for financial hardship, knowing the invisible hand of the government will be there to feed them with bailouts and more.
What’s even more unfortunate is that these business bailout plans are reserved for those deemed “too big to fail” and won’t offer much, if any, support to the millions of small businesses around the world.
If your business has been impacted by the COVID-19 pandemic, there are steps you can take to remain lean, and stay solvent during these turbulent times. If you need some more ideas for expenses your business can cut from its operations, the visual below features 16 expenses your business should reconsider:
Salman Zafar is an acclaimed blogger, editor, publisher and digital marketer. He is the founder of Blogging Hub, a digital publishing portal with wide following across the world.