Seven Ways to Cut Cost
Without Cutting Your Lifeline
By Lorraine Haataia,
When the global
economy is in a recession, all companies – from Fortune 500s to
small, family-owned businesses – suffer. And some of the weakest
ones become casualties, leaving their employees without jobs, and
losing customers to their competitors. During these tough times,
owners, executives and managers often make decisions about jobs,
resources and facilities they think they can do without, and then
they cut. But this isn’t necessarily the best answer. The truth is,
excess waste accumulates in all of these areas during prosperous
times. When managers don’t have to worry about the pennies, the
company can quickly begin to leak dollars. And it can easily go
unnoticed for months and even years.
But when the
economy tightens, companies must look for innovative ways to
streamline – rather than cutting what might be their lifeline.
Management needs to first recognize leakage within the company, and
then involve employees, suppliers and even customers to find
waste-trimming opportunities. Here are seven ways your company can
reduce cost and improve current business practices while
strengthening the core business.
Have your top
managers, in-house optimists and experts lead discussion groups for
It’s common for
companies to send employees to outside training programs that range
from $199 to $1,999 per person, but this isn’t necessary. Employees
can meet regularly to discuss articles, books or DVDs on relevant,
specialized knowledge. For example, after reading a David Allen
productivity book, one executive assistant came up with an idea to
set up a corporate calendar with the major events at all their
sites. This calendar posted on their intranet allowed for organized
planning and a reduction in their travel costs by 20 percent.
flexibility to meet their personal goals and you’ll build loyalty
If you’ve never asked, you may be surprised when you learn your
employees’ lifestyle desires and attitudes about money. Many of them
probably want more flexible work hours and breaks, instead being
held accountable to work results and deadlines. If you go this
route, have faith in them to help set up new pay structures.
Numerous employees may take advantage of a leave-without-pay if they
had the option. Compensate in proportion to incoming orders and set
up pay-for-performance with cost tied to revenue.
telecommuting and flex-time policies. Providing office space for all
your employees is costly and often unnecessary. Consider surveying
your employees for their work preferences and then set up processes
and work schedules to allow more people to work remotely or from
shared workstations. You can then update job descriptions, work
instructions and measures to ensure that expected work results are
clear to everyone.
cost-saving green solutions.
If you’re supplying
coffee, disposable cups and other freebies to your employees, you
may want to reconsider these expenses. Employees can bring in
reusable mugs and utensils instead. Ask your employees, already
passionate about the environment, to continually search for and
implement cost-saving green solutions such as: installing
thermostats with timers or motion sensor light switches to help
reduce your utility bill, installing motion sensor faucets to help
save water, or identifying vendors to purchase your waste products
such as scrap metal or electronics, which can also cut back on your
garbage. Green is in – go with it.
estimates from your suppliers and their competitors, and you may be
able to tap into a gold mine.
Your current suppliers desire to keep your business, so persist in
getting at least two additional bids on all your services annually.
Invite them to do an analysis for new cost-saving ideas. Befriend
them as potential partners and you’ll win their mental power in
giving you potentially priceless ideas. This can save you a fortune
over time. Even if you choose to stick with the same associates,
it’s always a good idea to have leverage to renegotiate rates and
and prioritize your customers and their purchases. Any company offering multiple products or services has some
that are more profitable than others. If you haven’t reconsidered
your less profitable ones recently, now is the time. Analyze the
segments and the cash value differences among them. Once you have
this data, you can restructure your pricing or sales processes to
encourage customers to behave in ways that keep your costs down, or
you may even choose to discontinue some of your services. If they
truly want those that are less lucrative, and you choose to
continue them, adjust your prices to ensure profitability.
mental chemistry and decision-making abilities in your employees by
starting a Toastmasters Club.
complain about too frequent and ineffective meetings. One solution
is to start a Toastmasters Club in your company and encourage
everyone to participate. It’s a nonprofit organization with a proven
feedback system to advance communication and leadership aptitude.
Members build self-confidence, overcome fears and grow
relationships. Google, Starbucks, Dell, Disney, McGraw-Hill,
Microsoft and many other top organizations sponsor clubs for their
employees. At less than $100 a person per year, these clubs improve
participants’ productivity in and out of meetings. Good
communication is the most essential competency in any company with
two or more people.
in regularly adjusting operations to improve efficiency.
You may be surprised at the excitement when you get
everyone engaged in fixing their biggest frustrations and
time-wasters. If you aren’t ISO 9001 certified, get a copy of this
latest Quality Management System document from the International
Organization for Standardization. It provides a powerful set of
globally-tested principles to keep everyone focused on continually
improving processes and enhancing customer satisfaction. If you
don’t focus on improving your work systems, they quickly become
outdated, reducing efficiencies and increasing risk. Your processes
drive your bottom line, day by day, toward bankruptcy or prosperity.
easily learn to recognize where time or resources are being wasted.
Offer them incentives for cost-saving ideas and recognize them among
their peers. Give them 10 percent back in monthly or quarterly
payments, for example, against the annual savings opportunities they
discover. This increases their loyalty and willingness to search for
more ways to save, and the company still comes out ahead. The people
you least likely expect, such as your lowest producers, might come
up with the best ideas, since they’re the ones who look for short
environment where people expect change. Once you systematize
perpetual feedback from your employees, customers and suppliers,
your core business will thrive regardless of economic conditions.
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