The year 2020 was a challenging time for businesses around the world in nearly every industry. The COVID-19 pandemic brought sudden changes to daily work life and reduced revenue in ways that have left organizations scrambling for solutions. In many cases, layoffs have been the go-to solution for companies looking to reduce costs and maintain margins. However, downsizing your workforce is not the only way to reduce costs and, in many cases, may create more complications for teams who suddenly find themselves without the staff necessary to perform their jobs.
There are many different ways for organizations to reduce costs without resorting to layoffs. The following five options can help your company cut spending without cutting your workforce.
1. Cut Extraneous Expenses
In a time of slimmer margins, it’s critical for every company to take an in-depth look at their budgets and separate necessary from unnecessary expenses. From workplace snacks to team lunches to advertisements, these extraneous expenses can constitute a larger portion of your monthly and annual costs than you know. Hopefully, reducing these changes in expenses will be temporary, but the impact should not cause major complications for teams. Doing so will help your business avoid resorting to layoffs as the only way to slash the budget.
2. Consolidate Incidental Costs
While your organization may have already cut back on major expenses, such as holiday parties and event travel, there are many smaller costs that can quickly add. Consider taking incidental costs like training days, the use of outside facilities, and major events, and consolidate them to make the most of the time and money being spent. For example, Harvard Business Review cites how one university held their Parents’ Weekend and Homecoming on the same weekend and was able to save close to 40% of the combined cost. These efforts can keep traditions in place for employee morale while cutting out major expenditures.
3. Leverage Telecommuting
Telecommuting is now a common occurrence for companies around the world to keep their employees safe and healthy. However, there are even more advantages to telecommuting when it comes to cost cutting measures. Because office space is no longer being used, or is used in a much more limited capacity, companies can scale back their utilities bills and various costs that come from creating a good in-person work environment. Make sure that day-to-day expenses that were necessary before have been paused and budgets that were assigned for such needs are now being reassigned. However, it’s important that companies reallocate a portion of this budget to support at-home work to ensure their employees are safe and equipped for success.
4. Focus on Utilization Rates
A highly productive team is a more profitable team and layoffs, despite pushing more work onto each team member, may not necessarily change that. Instead, it is critical for managers to gain a clear view into their individual resources’ utilization rates and see where improvements can be made for each team member. Through a dependable and insightful resource management solution, daily, weekly, and monthly utilization rates can be viewed and analyzed. By changing schedules and tasks, as well as by providing better support, these rates can be increased, resulting in greater productivity and more billable hours per resource, quickly improving margins.
5. Make the Most of Contractors
Contract resources have become an increasingly important part of the success of today’s businesses, but seeking out freelancers may be more important than ever right now. Simply put, your current team may not have the skills or time necessary for your projects, but another full-time hire may not be warranted. Freelancers can provide the specific skills for short periods of time in order to get tasks done as needed without overhead costs including training time, hardware, and insurance costs. By leveraging your freelance network, you can continue to provide the same amount of work as before, without a major increase in your employee costs.
Together, these five strategies can help you maintain a profitable business that is slimmer in daily expenses, but not slimmer in the size of your team.
Reduce Your Costs, Improve Your Profits
Reducing costs at your business can only take you so far. You also need to consistently improve your profits. Learn how to increase your profits across the board in our ebook, “5 Steps to More Profitable Projects.”