How do you make cutbacks without damaging your business? If you have to economise , you'll need to work out how to cut the dead wood in your business without damaging the healthy parts, advises Bruce Townsend of SellerDeck
Cutting costs can help improve the health of your business but it's vital to make them with care. Here are five tips when it comes to cutting costs:
1. Survival is the first priority
Don’t be a dreamer with your head in the sand, just hoping for the best. Face the realities and do what’s necessary. But don’t cut tactical activities that are delivering real value today, such as an online marketing campaign.
Keep up-to-date with what is producing results and what is not. Think ahead - don’t let yourself be bounced into spur of the moment decisions, making cuts without considering the outcome. Decide in advance where the axe will fall on the basis of hard facts about current performance.
2. Focus on reputation, not on prestige
When business is booming, we can afford to splash out on more costly items that enhance prestige, such as an expensive company car. In times of limited resources indulgences have to go, however attractive they seem.
But your reputation is always of paramount importance. You need to invest in market awareness and listen to your customers, to keep delivering the right products at the right price. Without that, you don’t have a business. Continued focus on good customer service will help to maximise the return from your marketing, by ensuring that customers keep coming back.
3. Hold on to the measurable
It was John Wanamaker who famously said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half”. Marketing has moved on immeasurably since then, and online marketing in particular provides metrics that were unheard of in Wanamaker’s day.
Be disciplined about measuring results from your marketing campaigns, using separate 0845 numbers, email addresses and website landing pages. Examine the statistics weekly, or even daily, to identify the most profitable activities. Drop the things that are not profitable. Hone and refine the things that are.
4. Be honest about waste
Let’s face it, sometimes even our best ideas just don’t work. If your own pet project isn’t performing, be ruthless about recognising the fact and dump it. Don’t let pride or political expediency get in the way of doing the right thing.
Every business has holy grails which no-one dare lay a hand on, either because "we’ve always done it that way" or because "we’ve never had to manage without it, and we’ve no idea what will happen if we take it away".
If you can’t see any justification for it, then let it go. Don’t let inertia or emotional attachment affect your decision-making. Some things are a millstone round your neck.
5. Keep your eyes on the prize
As your fortunes improve, be ready to capitalise on new opportunities and make sure you fill gaps in the market. Focus on value for money. When others are cutting costs, there are bargains to be had. Invest wisely - in staff, infrastructure or brand-building - and you can build a strong platform for the future.