Because of the economic climate COVID-19 has caused, businesses everywhere are working hard to reduce expenses. Effective cost-cutting techniques don’t just help you save money. They also build your company’s resilience and prepare it for setbacks. They teach you how to work with what you have right where you are. And when you succeed at getting your team involved in spending cuts, you increase your company’s growth potential.
Establishing cost-reduction methods that get everyone involved
The responsibility of reducing expenditures is not one person’s burden to bear. Executives can only reduce spending if there is a solid cost-conscious culture and everyone is committed to the company’s cost-cutting goals.
Here’s how to get employees on board the cost-reduction train:
- Create a culture of spending consciousness and accountability.
People find it easier to be mindful of their spending habits when those around them are too. Train newbies on the need to control expenses from the get-go. The sooner they learn, the better the chances of them getting involved in cost reduction.
Because employees take their cue from leaders, setting an example is integral to creating a culture of conscious spending. As a CEO or a business owner, you can share the personal ways you reduce costs for your business and inspire your team to follow suit.
Another way to cultivate a financially responsible culture is through transparency. Share financial reports and be transparent about your company’s financial health. Painting a clear picture of your company’s financial situation bolsters your employees’ accountability. It helps them understand that their actions have a direct impact on the company’s success.
- Establish a fair cost-reduction strategy rooted in shared values.
Once you have taught your employees about better spending, it’s time to set up an impartial cost-reduction process. Generally, this is a four-step method that includes:
- Structuring the initiative. This is the brainstorming process in which the business owner confers with managers or team leaders about where the company can find cost-cutting opportunities.
- Analyzing the discussed opportunities. This is where members suggest ways to tackle the identified areas for cost reduction.
- Decision-making. What specific actions should the company take? Who will execute these actions, and how?
- Implementation. This is when the solutions discussed are set into motion.
For the cost-reduction process to be effective, it should include everyone in your team. Gather input from frontline employees, team leaders, and C-suite executives.
Take a look at your action plan from various angles. Ask questions like “How will reducing costs in this area affect others?” and “How can these solutions improve the bottom line?”
Don’t forget to include your team in the equation. Ask “What solutions complement your culture and mission?” and “What’s in it for your employees?” This is key to implementing solutions that strengthen commitment and lasting change.
- Invest in your employees.
Employee engagement is crucial in your cost-saving initiatives. The more committed and happier your staff are, the better their productivity. Disengaged employees can rack up costs through chronic absenteeism and turnover.
Make a conscious effort to ensure that your working environment is conducive to learning and collaboration. Some business owners skimp when it comes to investing in their staff, not recognizing that this puts them at greater risk for financial setbacks.
To develop and invest in your employees, don’t stop at asking for their input. Act on their suggestions as well. Provide secure channels for gathering feedback, benchmark output per employee, and provide support for struggling departments. You can do this by investing in staff training or providing incentives for good performance.
Investing in your employees will put you in a better position to recognize their strengths, which you can leverage to push your brand forward.
- Consider external cost-reduction opportunities.
Cost-saving opportunities aren’t confined to your company. You need to be able to recognize when it’s time to get outside help.
One of the first areas you need to look at is staffing. Remote work has been on the rise over the last decade, but the COVID-19 pandemic has thrust it into the limelight. The current crisis has highlighted the need for work-from-home set-ups for business continuity. It has also proven the many benefits that remote work offers companies, including cost reduction.
Hiring remote workers saves companies a substantial amount of money. When employees are not working from the office, businesses can save on rent, energy, utility, cleaning, office supplies and equipment, and other costs. When employees are well-equipped and trained to work from home, there’s also less need for business travel, one of the biggest expenses companies incur.
Outsourcing remote work allows you to build your team without breaking the bank. Virtual assistants, through proven staffing agencies, generally have specific fields of expertise. So whether you need customer service support, content creation or website development services, or digital marketing assistance, you know you can hire a VA who fits the bill.
What’s more, hiring a virtual assistant from a full-service staffing company means you start saving from the recruitment process to training, onboarding, and employee management. Staffing companies take care of these processes so that business owners can focus on their core functions and goals.
Consider utilizing a hybrid model, where your core processes are performed by in-house staff either at the office or from home, while your repetitive but essential “admin” tasks are outsourced to virtual assistants.
In the past year, companies worldwide have been announcing extreme cost-cutting strategies, including massive layoffs, as a result of COVID-19. If you’re not confident that you have a well-established cost-conscious company culture, now is the time to act. Getting your employees involved in reducing business costs is key to maintaining solvency and staying afloat when things get rough.