As the New Year approaches businesspeople around the world are looking forward to a fresh start in 2021. Many of them are also looking for a way to reduce business expenses in a bid to ensure that the business is geared up to meet the challenges of a new year.
If the unexpected events of the past twelve months have left your company reeling but still afloat, you have plenty to feel good about – and streamlining your operations will be key to your success in the post-COVID business landscape.
As commercial activities wind down for the holidays, now could be the ideal time to plan for the year ahead. Here are some ways to reduce your business expenses and prepare your enterprise for renewed success in January and beyond.
Rethink your staffing requirements
The experience of having your employees work from home extensively this year may have shone a light on who is really essential to your business – and who isn’t.
- If you’re weighed down by an expensive salaries and wages bill – especially as your company shifts to an online business model – you may need to reduce some of your team’s working hours or even take the tough decision to lay employees off.
- An alternative to making drastic layoffs is to consider which of your staff complement can continue to work remotely, allowing you to re-evaluate your office space requirements and save on rental.
- Most employees have adjusted to working from home and many recognise that there is a financial benefit to them as they save on commuting costs – be the costs public transport or vehicle maintenance and insurance, it’s a significant saving. They also save on “work clothes” as working in an office requires a second wardrobe for most employees and this means more to clean and often even a monthly dry-cleaning bill. There are other savings such as spontaneous lunches and coffee breaks with colleagues and even certain tax breaks that they could be eligible for. All of these afford the employer an opportunity to renegotiate the package taking all these employee cost savings into account.
- It’s essential to undertake this process in consultation with a labour lawyer or HR specialist and deal openly and fairly with all parties involved.
Lower your fixed expenses
Doing business during the pandemic can be challenging – and unnecessary costs could make the difference between a profit or loss on your income statement this year.
- Office space rental costs, salaries, insurance, recurring expenses and supplies purchased in a recurring manner can all add substantially to your monthly overheads.
- By lowering your monthly expenses you’ll be building a more flexible enterprise that can pivot to take advantage of new opportunities in the post-pandemic business environment.
Downsize to upsize
With the COVID-19 pandemic set to last at least until mid to late 2021 the most crucial objective for any business is survival and continuity. A temporary downsizing process could put you in a position to grow again when things return to normal.
- Scaling back on admin and sales expenses while maintaining your company’s core product and service (and remaining relevant to your target market) is key to any downsizing exercise.
- Once your business is ready to grow again, you’ll be able to expand and pursue new opportunities with your company’s core value intact.
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