Cost Cutting – 10 Effective Ways To Cut Overheads in a Poor Economic Climate

Although redundancies are sometimes inevitable it’s best to try to cut costs in another way before resorting to this.  Redundancies are not only costly in themselves but they also reduce staff morale and mean a business could lose competent staff or create a skill imbalance.

Instead of resorting straight to this option why not look at doing a cost cutting exercise.  Spend some time looking closely at what is spent and what is wasted to see how you can better manage the business finances.

Below are just a few ideas to get you started:

1. If you have a lease on premises try negotiating with the landlord to get reduced rent.  Landlords would rather have their space occupied and receive rent than it sit unoccupied or have to go through the hassle of finding new tenants.
2. Rent your spare space out.  Subletting is becoming increasingly popular.  If you have a spare office, or even a spare desk, there are people who are willing to pay for this.  Some companies are looking for hot desks for staff to work out of in areas they are not already established in, and as long as they can access the internet and a phone line then they can work from anywhere.
3. Utility bills are an area where big savings can be made.  There is a tendency to just stick with the current provider rather than go through the hassle of switching elsewhere.  But you will often find low rate deals for switching which can saving hundreds if not thousands of pounds a year.  Check contracts though as you don’t want to be tied in to long contracts.
4. Manage your cash better.  Don’t pay bills until they are due and get your income in as quick as possible – arguably this will make your cashflow run more smoothly.  Also be more aggressive with those late charges for clients who don’t pay on time – it’s there fault not yours so charge them for it.
5. Get rid of those credit cards.  They have high interest rates and many banks are currently offering interest free or low interest overdrafts to businesses.
6. Train smarter – training costs thousands of pounds but it is a good incentive for many staff to be more motivated.  Look into online training and on-site training rather than sending individuals on courses separately.  Also look at the skills base in your team – you will often find you have an expert in some areas who could do training for you.
7. Look at working with partner organisations or related businesses to gain some group discounts.  Training courses often provide group discounts, and there are often incentives for recommending ‘friends’ to current suppliers.
8. Take advantage of technology.  Many technologies out there can reduce costs such as IP telephony.  In some cases you can completely do away with your current telephone systems and run this via the internet instead.
9. Watch your competitors – what are they doing differently? Are they charging less?  The last thing you want is to be losing business because a competitor is charging marginally less.
10. Consult with staff.  They are the people who know the ‘on the ground’ business the best.  They might be able to give you ideas for cost cutting or working smarter that you would have never thought of.

So before resorting to redundancies, why not look at cutting down on some costs in other areas.

Redundancies should never be the first port of call, retaining a skilled and trained workforce will help businesses through the hard times.

If you opt for redundancies you could face loosing staff motivation and loosing some skilled staff leaving you with gaps in your business functions.