How to effectively cut expenses.
by Andy Buyting on Oct 27 at 6:00 am
It’s not about slashing costs. Cutting expenses must be strategic and well thought out. Especially in this economy, when faced with declining sales don’t start cutting costs across the board without a plan.
These days, small business owners are worried. In my travels, I have spoken to numerous entrepreneurs that have faced and are still facing top line revenues declining. It doesn’t take long to realize that if your company was making 8% bottom line profit, and your sales drop by 10%, you’re not going to survive the long haul if you don’t change your costs of doing business.
However one big mistake that I see happening time and time again is business owners panicking, then jumping in and cutting expenses everywhere they can. Instead of being strategic and having a plan, they go line by line, cutting anything and everything they think they can get away with.
“Slow down! Have you thought this through before you started slashing?”
Sadly in many cases the answer is “No.”
When you start cutting costs, you have to be strategic. Be careful. DO NOT cut anything that takes away from the shopping (or eating for restaurants) experience. Please, please do not cut back on those things. You can become more efficient, yes. But don’t drop services or activities that take away from your customers’ experiences. You have to make sure you always make your customers feel special. Start cutting back on their experience and they’ll quickly get the sense that your company is in trouble and that things are going downhill, creating a death spiral that you want to avoid at all costs.
When you start looking at your expenses and cutting costs, make sure you cut waste – expenses that add little to no value to your product or service. Never cut into your customers shopping experience.
Photo by krossbow on Flickr.
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