With stock markets in turmoil, interest rates on the rise, and many sources of previously easy funding drying up, you may be thinking it's time to start cutting costs. About 70 percent of costs for most businesses are staffing related, notes the personal finance site GOBankingRates, so you may think that meaningful expense reduction requires laying off staff. But that's a depressing prospect, and often a bad bargain because unless you've hired more people than you need, it's difficult to reduce head count without adversely affecting the quality of your products, services, or customer experience.
Since you care about the people who work for you--as well as your customers--that's a highly unpleasant prospect. And it may not be necessary. To help you preserve the bottom line and your current staff as well, GOBankingRates has compiled a list of 17 ways small businesses can save money without eliminating staff.
You can find the full list here. Here are 7 of the best ideas:
1. Sublet part of your office space.
If you have more office space than you need, or if you can get by with less, then subletting your extra space can not only lower your rental costs, but also bring all kinds of extra benefits, according to GOBankingRates. If your subtenant is a customer, sharing the same space can strengthen your relationship. If it's a partner or potential partner, you may find your proximity helps you find new ways to work together.
Put the word out among your business contacts that you have extra office space, and specify what kinds of organizations you'd like to rent to. Or, simply contact potential subtenants directly and ask them if they need more space.
2. Share your staff.
Your accounting, HR, customer service, and other service staff could also provide similar services to other (non-competing) companies that need them. Look around for compatible companies, especially new or growing ones, to find out if they need these services. Combining this approach with shared office space might create an attractive package for a company that's smaller or newer than yours.
3. Focus your marketing on existing customers.
When times are tough and business is slow, many companies use marketing tactics to attract new customers. That's not the best use of your marketing funds, however, since it costs six or seven times as much to land a new customer as it does to retain an existing one. So if your budget is tight, before you go fishing for new customers, see if you can get more business from existing ones by selling new or additional products or services.
You can also increase the value of existing customers if you can alter your terms so that they pay you more quickly. This may or may not work in your industry, but consider whether you can create more favorable terms by getting partial payment up front or offering a small discount for those who pay right away.
4. Let employees work remotely.
If you're not doing this already, there are many reasons why you . If you have the right people doing it, and they're managed well, remote work is a win-win for employee and employer because both of you can share the extra time employees have from eliminating their daily commutes. It can also save you on office space (or allow you to sublet some of it), and other resources such as food and electricity. And you will wind up with more loyal employees. should
Two caveats: Don't force anyone to work remotely who doesn't want to. And do have everyone come to the office on a regular basis so they remain part of the team.
5. Hire interns.
Many small businesses and startups use interns to keep staffing costs down. That's a great idea because it also means bringing youthful, energetic, enthusiastic people into your company, and it can help you get a line on great talent later on when you're ready to hire. Make sure your internships are as good a deal for the interns as they are for you--for instance, if an intern is supposed to be getting educational credit, make sure that working in your company really is a learning experience. Don't have that intern spend all his or her time scanning documents or running errands.
6. Negotiate everything.
If times are tough or your company is facing cost-cutting, ask for discounts from your suppliers. They may be willing to cut prices in exchange for early payments (cash flow permitting). Or they may offer you a discount because they want to support your business and keep you as a long-time customer. From your rent to your office supplies to your technology to the things you need to run your business, many more things are negotiable than most of us realize. It never hurts to ask, especially if you can find a way to do it gracefully. The worst they can do is say no.