Cutting Costs And Staying Competitive: How To Weather A Financial Crisis

When times get tough economically – and you’d be hard-pressed to deny that we’re in such a spell presently – thoughts will always turn to cutting costs. This is the first place minds go when people are looking for a way to weather a financial storm, and it’s obvious why: if you have less cash to spare, you will look for ways to spend less. This, of course, doesn’t come without some complications. It’s all well and good talking about cutting spending – but how do you do it without creating a problem elsewhere?

It’s probably fair to say the idea of making a business “recession-proof” is extremely fanciful. If a recession is severe enough, it’s inevitably going to have impacts on a business no matter what you do. But there are definitely more efficient and less-efficient ways to cut costs in a business – and the following are a few ways to do it without worsening the impacts of the crisis on your chances of running a successful business.

Address inventory

It’s common for businesses to carry as much inventory as they can, in preparedness for a rush on a particular item. But the existence of clearance sales is demonstrable proof that there are disadvantages to carrying too much inventory, and the wisdom of “feathering the nest” in such a way is at best questionable. You can certainly carry significant inventory of items that always sell well – the less often you have to reorder, and the bigger a bulk discount you can get, the better.

However, for items that take a while to make but which aren’t as high-volume selling, consider alternatives such as 3d printing in Dubai, which can speed up production and produce items on a one-off basis so you don’t need to waste space and money that could be better used.

Audit your perks

Cost-cutting, for too many businesses, means cutting staff or salaries, and this is far from ideal for more reasons than the obvious. First of all, the threat of redundancy is a horrible thing for any employee to face, and second, it’s a huge demotivator for those who remain, who won’t do their best work if they see their friends fired and imagine they’ll be next. An audit of employee perks may be a better place to start – does it make sense to fund staff drinks in an era where people are socialising less in general? Do employees need, or value, the opportunity to get consumer discounts on luxury items? Only when you have trimmed excess fat does it make any sense to evaluate redundancies or even pay stagnation.

Revisit remote working

If you’ve encouraged workers back into the office since pandemic restrictions ended, you might want to think again. Every person you have coming into work is one more computer switched on, one more individual using water and electricity, and all the rest of it. This does increase your overheads, and study after study shows it doesn’t boost productivity. Letting people work from home, and even encouraging them by offering incentives, can save you money. It doesn’t need to be compulsory, but it can work out better for everyone in the longer run – and may even allow you to move into smaller, more affordable premises.

Ask your customers what matters to them

Businesses are good at telling their customers what they want, and often surprisingly leaden-footed when it comes to finding out what they actually want. So it is worth running a process of listening to customers to hear what they value about your company. You may learn that there are things about your service you deemed essential, but which are actually dispensable. It may be that you are missing out on obvious savings you hadn’t even considered.