Strengthen Your Business in Uncertain Times: Part I: Reduce Overhead Costs and Debt

Making sure your company has no unnecessary expenses and a liability is the first step you should take when looking for ways to strengthen your business during uncertain economic times. Here are a couple ways you can look to keep your business lean and operating in the positive.

1. Find and reduce any big costs or debts from things that are obviously not needed to keep your core business operating. One way to do this is to lay out all of your larger expenses and rate them based on two score calculations: Elimination Consequence and Amount Saved.

Elimination Consequence:
Rate each item from 0 to 5 based on how much it hurts your business to eliminate it - 0 means you cannot eliminate it without severely affecting your business and 5 means you can eliminate it without any affect to your business operations.

Amount Saved:
Then rank each item by how much potential money it can save your company - 0 saves no money and 5 saves a lot of money.

To get the total value, multiply the two scores together for each item. For example, your best performing senior sales person may score a 4 on the amount of money saved, but a 1 for the elimination consequence (because it would largely affect your sales to lay them off), their overall score would be: 4 * 1 = 4. The items with the highest scores are the first things you should consider getting rid of. Of course, this is just a tool to help you gain perspective. Where you actually decide to cut costs is up to you.

2. Reduce costs by setting a target goal to cut a certain percentage, say 10 percent, from all the different parts of your business. This is a good alternative if you can’t find any big expenses to get rid of. By tightening the slack a little here and there, it can add up to significant savings for your company as a whole.

Each business is different, so use your creativity to find places to save. Ask yourself how you can produce your product for less. Eliminate production of a product that isn’t performing as well. Or, if your business travels a lot, consider using more fuel efficient vehicles or traveling coach instead of first class. Greening your business is a good way to save money while also increasing your business image.

It’s not always easy to cut costs, but in a down economy only the lean survive. Use your creativity to find places to cut costs while improving their business at the same time. The more of these you can find, the stronger your business will become.


Part I: Reduce Overhead Costs and Debt
Part II: Synergy - Become partners with a complimentary business