With the impacts of COVID-19 continuing to become evident within the economy and more broadly, businesses must look at reducing expenses whilst maintaining efficiency and effectiveness.
Already, a significant number of businesses have suffered – changes in consumer demand, restrictions and regulation, and shifting business practices have all occurred on an unprecedented scale. In dealing with these new problems, you likely want to do it whilst maintaining staff, and continuing to operate in a similar manner. As a result, there are a number of areas in which you will have to focus.
In addition to possibly shifting business focus, altering operations processes and even completely reinventing your business, improving your financial positioning is key in ensuring that your efforts as a whole are effective.
With this in mind, here are the factors that could ensure your business survives the impact of the pandemic and comes out strong.
Consider a Shift in Overall Strategy
The first tip is to take a look at overall strategy – if you are in a position where changes can be made to overall approaches to business, your product offering, and marketing efforts, there may be room for improvement when it comes to expenses.
In approaching the task of reducing costs through shifts in strategy, an effective way of staying organised and prioritising areas of importance is to categorise and reevaluate your main areas of spending. Also known as your major cost centres, these are parts of a business that will indirectly contribute to revenue – an example of this is a customer service department.
Looking at these areas and determining the areas in which reductions or efficiencies can be made is a great way to shift your business focuses and cust costs significantly.
Cut Administration Costs
Whilst this might be an obvious point, administration is an area that is often bloated and overlooked from a financial perspective. Knowing where costs can be cut and efficiencies can be made is key in reducing administrative costs – doing so will mean a significant reduction in long term costs that would otherwise add up.
In doing this, a useful approach to take involves a step by step process – rather than aiming to solve your admin problems in one go (with what is likely a risky or problematic solution), implement a number of actions that will all make small differences. It is also important to limit reductions to suit your savings needs – this will ensure that disruptions to business operations are minimised.
Depending on the scale and type of business in question, possible approaches to cutting admin costs might include reevaluating employee productivity and focus, rebudgeting and taking control of miscellaneous costs, automating processes, and cutting down on underutilised tools.
Develop a Financially Focused Mindset
In developing a financially focused mindset, you will be able to reduce expenses easily, whilst maintaining focus on other business functions. The first step in doing this is to be proactive – this means getting ahead on cash flow forecasts, renegotiating with suppliers, and planning far in advance.
In addition to developing a focus on finance within a business context, this focus should also extend to include personal finances. Whilst business expenses and overall business cash flow are clearly crucial in improving the financial performance of your business, maintaining focus on your personal finances can make a significant difference to the way you approach your business. Even utilising something like a low rate card has the potential to dramatically transform your spending habits (click here to find out more) – this is something that will undoubtedly carry over to your business practices.