The economy in the past few years has not been kind to businesses owners. Sometimes you can’t cling to idealistic notions of how your business should be run, and hard tactics have to be implemented to ensure the survival of your company.
When strategic money management is necessary, here are some ways to blunt the blow.
1. Find your roots.
Recall how you built up your business when you were first starting out. Chances are you weren’t free and easy with the company checkbook. What did you originally judge as being the essential parts? Divide your business elements into the essential and the nonessential. Generally you can take out money from the non-essentials’ budget without inflicting a serious blow to the company.
2. Learn from the mistakes of others.
One large American bank faced budget cuts 10 years ago by cutting out employee amenities such as free coffee in the break rooms. At least one department manager was so demoralized by this insulting budget cut that he shared the information freely among clients as they sat at his desk conducting bank business. Do you think this instilled public confidence in the bank’s strength? No. And it also sent a bad message to bank employees: “We’re taking away your treats because we don’t view your happiness as important.”
3. Don’t devalue your employees to save a few bucks.
If you have to dig into your personal wallet to pick up coffee and donuts at the grocery store for the office break room every morning before work, then so be it. In fact, this tiny gesture will make a monumental impact on how your employees view your role. You’ll exponentially increase their loyalty and their motivation to pull through this budget cut thing together.
4. Make lemonade.
One high-profile architecture firm in Portsmouth, New Hampshire, decided to turn necessary budget cuts into employee benefits. Realizing that the economic downturn was bound to be temporary, they implemented a salary reduction/workday decrease program that would last until business improved.
Rather than lay off anyone, they reduced everyone’s salary by a certain percentage. In return, every employee got every other Friday off (or another day of their choosing). The day off was a free day—they didn’t have to work from home. The employees loved the extra free time and appreciated that no one would have to be laid off. A year later, the firm bounced back a full salaries with the entire company in attendance.
5. Monetize your resources.
Does your company own high-end office equipment such as wide-format printers or scanners that would be useful to other companies that can’t afford them? Advertise locally to other smaller companies that you are willing to allow them to use your faxes, copiers, etc., for a nominal charge.
6. Sublease your office space.
That same architecture firm in New England took another creative approach to budget cuts. They subleased a portion of their large office space to a landscaping firm. The landscaping business complemented the architecture business, making it a one-stop shop for residential and commercial home and office builders.
If you have extra space in your office, from one extra cubicle to an entire bank of desks, consider working with a real estate agent to find a complementary business that is seeking office rental space. You could even share your receptionist services (with her agreement, of course) for an extra fee.
7. Pull up stakes.
Don’t rule out the possibility of moving your entire business to another location where you can get cheaper rent terms. Maintain a relationship with a real estate agent so they can keep an eye out for suitable spots. If the price is right, a weekend spent moving your office might be worth it in the long run.
8. Change your entire office model.
Depending on the nature of your business, your company might be able to be run as an entire virtual office. This cuts down drastically on overhead. You could keep your business above water by modifying your employee agreements so they are independent contractors who work from home.
9. Invite suggestions.
Form a focus group or have a whole office meeting. Be candid about the financial position of your company; employees will know if you’re not. Ask for everyone’s suggestions about ways to handle the budget cuts as a team. Some of the suggestions might not be usable, but many might be. This will instill a team spirit that will last beyond this challenging time.
As you can see from the above list, a two-pronged approach is best when dealing with budget cuts. Looking at ways to increase income as well as ways to reduce spending is the fastest way to get your business back on firm financial ground.
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