10/01/11

By Benjamin Dyer of ecommerce specialist, Actinic

When cuts or savings need to be made people often make incredibly irrational decisions when real foresight is required. A common victim is the marketing budget, but if you suddenly drop off the radar, then customers and prospects are likely to assume the company is in trouble, so there’s an argument for upping your spend and visibility.

Making savings is never easy; the biggest cost any business has comes through the door on two legs. And unless you graduated from the Ebenezer Scrooge school of economics no one likes cutting people’s jobs. Unfortunately sometimes it’s inevitable, but I won’t try to cover best practice for this here.

However there are some less obvious savings that can be made that are less aggressive and have a significant impact.

1 Renegotiate everything

Seriously, everything is up for negotiation. The leases on your building and equipment, the coffee and water supplier, the broadband connection, the utility provider, etc. Give someone the task of shaving off a percentage of every overhead; it’s amazing how inventive and persuasive people can be when they are focused.

2 Don’t bin the luxuries, downgrade them

The first thing people try to do when cutting cost from a business is to cancel everything. One company I worked for tried to tell us the free tea and coffee it provided was the equivalent to a member of staff. Admittedly we drank a lot, but there is something very British about dealing with a crisis over a cup of tea. As a manager you have a responsibility to balance the books while maintaining staff motivation and us workers can behave very irrationally sometimes. How much money would it cost you if your staff walked out over the lack of their morning cuppa? Buy cheaper tea bags, or limit them, whatever works.

Look at expenses: no-one should be travelling first class nowadays. In fact unless it’s critical to your job should you be travelling at all?

Maybe review your employment package; are you being over-generous on the health insurance and bonuses?

3 Go green

So, if you’re not travelling, invest in some good conferencing technology. Web meetings, web cams, conference calls in my experience, can be just as effective. The investment pays for itself in no time, and it’ll reduce your carbon-footprint. At my company we’re using Skype which is free.

Also look at your energy costs, once you have negotiated a new contract (see point one above) or switched supplier you need to go green. Turning off computers and printers, ditching electric fan heaters and replacing old CRT monitors for efficient TFT models -- it’s amazing how it all adds up.
And review your work practices. Can your staff work from home all or part of the week? Do you need the big office at all?

Conclusion

Making savings in your business is never easy but from experience, getting everyone together and communicating a clear message goes a long way. It’s vital you evoke the Dunkirk spirit amongst your team; it’s surprising how resourceful and flexible people can be if they understand the need.

Above all be rational and cut wisely; small businesses are agile and perversely cutting cost sometimes plays into your hands by forcing you to focus.