Guide for Cutting Small Biz Expenses During COVID-19 Crisis

To say that we’re in the middle of a tough time is an understatement. It’s not just a health crisis – it’s a financial crisis, too. And as a small business owner, you have to navigate some pretty treacherous waters. Do you have a plan?  

5 Ways to Slash Your Expenses

During times like these, increasing revenue isn’t always an option. The better focus is on how you can reduce expenses to stay solvent. We have a few suggestions:

1. Eliminate All Non-Essential Expenses

According to leadership management expert Kevin Coyne, most departments can cut costs by 10 percent without any sort of major detrimental impact on the company. This should be the starting point. Not sure where to start to slash 10 percent of your expenses? He suggests:

• Consolidating incidentals. (In other words, combine and cross-schedule things so that you can save on resources and utilize company time in a better capacity.)

• Take overdue personnel action. (Terminate/lay off employees that don’t add value, or reassign them to areas where they can produce more value for the company.)

• Reduce spending on department management. (Reducing the amount of time spent supervising.)

• Gain control of miscellaneous spending. (This includes everything from purchasing stationery and pens to catered lunch on Fridays.)

• Hold off on pay increases and bonuses. This is obviously just a start. Many businesses need a way to slash expenses by 25 or 50 percent. In these cases, you’ll have to be more aggressive. Anything that doesn’t directly contribute to producing revenue or retaining important assets needs to go.

2. Barter Services With Other SBOs

You’re not the only small business in rough shape right now. There are millions of small business owners struggling. Can you find a way to barter services with them? By trading services, you’re able to gain access to something you need without incurring a direct cost. This could save you thousands of dollars per month 

3. Join a Group Purchasing Organization

Are you familiar with group purchasing organizations? They’re basically platforms that allow a group of likeminded buyers – such as small business owners in a similar niche – to pool resources and buy products at lower price points through economies of scale. If you’ve put off joining one, this could be a great time to pursue the idea further. 

4. Over-Communicate With Everybody

 Now’s not the time to clam up and go silent. As much as you might want to retreat to your bedroom and binge Netflix all day, ignoring the current circumstances won’t do you any good. 

 “Be proactive and call each of your key business relationships—customers, suppliers, partners, consultants, and anyone else critical to your company,” attorney Chris Sloan advises. “Ask how they are doing. Tell them how you are doing. Let them know that you want to work with them to find ways for everyone to make it through the current situation and beyond.

5. Negotiate Debt Payment Deferrals

 Speaking of reaching out and communicating with partners, don’t be afraid to contact your lenders, mortgage providers, and creditors. They’re living in the same world you are. You might be surprised to learn how much they’re willing to work with you.

Debt payment deferrals are very common practice in their industry at the moment. Ask about your options. Many major lenders are allowing businesses to defer payments 30, 60, or even 90 days without fear of penalties and fees. Think about what kind of relief this could provide!

Keep Treading Water

There’s a saying in business that if you’re standing still, you’re falling behind. In other words, it’s not enough to be satisfied with where you are. You have to constantly pursue growth and improvement.

Well, today is one of the few exceptions. 

If you happen to be in an industry or niche where you’re able to grow, then by all means – be ambitious and unrelenting. But for most small business owners, this is a time of survival. And treading water – or standing still – is more than fine.

If you’re able to come out of this crisis with a business that’s intact, you’re doing better than the majority of entrepreneurs and business owners. Depend on these cost-cutting strategies to stay lean and operable. Then when life gets back to normal, you can rediscover that laser-focus and grow.