As we progress through (and emerge from) the pandemic that has shut down the global economy, we will start to see how widespread the impact crater is that’s left behind. It’s likely that every single industry and business will be impacted in some way or another.
If you consider a point-of-sale software company like Square, just think about the decline in face-to-face transactions and how hardware sales have likely gone to zero. Businesses like this will effectively need to start from scratch and deeply consider each line item in their liabilities section of the balance sheet.
In the wake of the pandemic, your business will become painfully aware of each expense that drags on cash flow. This is why you must consider some of the areas that you can reduce, if not eliminate, from your business expenses.
The OPEX, or operating expenses of your business, will likely be the first to see significant cuts. Some of these include:
- Office space
Reconsider the need for large executive offices, co-working space, warehouse space, and more. If you are already locked in a lease, consider subletting your space to other businesses and start incentivizing your workforce to work remotely to foster a distributed workforce.
- Expensive tools
If you have been utilizing any software as a service products that come at a hefty recurring cost, look for ways to reduce these expenses. Either by consolidating accounts, seeking less expensive competitors, or consider how your business could operate without the product. It might be painful and less productive in the short term, but you must place long term survival ahead of short-term productivity gains.
As you fight to win back every order, customer, and potential customers you had before the pandemic, you will not want to cut marketing expenses to zero and instead look for ways to optimize. Now is the time to consider the return on investment for each and every marketing channel you utilize.
- Branding Elements
Now is not the time to get more business cards, branded Patagonia sweaters, or anything that doesn’t drive tangible results. Just like how the expensive signage you got installed in your offices has zero impact on your bottom line, your new T-shirts are just as ineffective.
- Display Ads
Perhaps your company’s marketing strategy was built entirely on billboards in airports. At a time like this, however unprecedented, the ROI has likely declined as much, if not more so, than the foot traffic through airports globally, more than 90 percent. Instead, focus your efforts on digital advertising, content marketing, and SEO that can still reach your target audience as they remain in quarantine.
In a time of widespread layoffs and companies of all sizes being forced into bankruptcy, it’s more important than ever to consider your HR expenses.
- Hire freelancers instead of full-time
Now is the time to leverage the power of consultants, freelancers, and part-time employees. As the global workforce is reorganized, there is no better time to call on these people for their wide range of skills and services. Most successful companies have only felt growing pains in the past, but shrinking pains are far more painful, and should not be forgotten soon. Each and every full time hire moving forward must be the right person for the job and fit into the budget of your worst-case scenario.
- Cut lavish perks
We are all far too familiar with the perks of working at tech companies like Facebook and Google, with meals, snacks, alcohol, and much more, accessible to every employee. Consider some of the perks you offer your employees and ask if they are still necessary or relevant. Reduce their expense accounts, cut back on freebies in the office, and more.
Whether your business has felt the economic earthquake or will feel the aftershocks, understanding what expenses can and should be reduced is essential to your business’s survival. If you need even more inspiration for budget cuts, check out the full visual below from Embroker featuring 16 business expenses to reduce.