Year end can’t get here soon enough for some business owners — especially those whose companies have exceeded their annual budgets. If you find yourself in this unenviable position, you can still cut costs to either improve this year’s financial picture or put yourself in a better position for next year. Here are some ways to reduce costs for an organization when the company has already gone over their budget.
It’s easy to put off tough staffing decisions, but those issues may represent an unnecessary drain on your finances. If you have employees who don’t have enough work to keep busy, think about re-structuring jobs and focus on improving employee performance. You might let go of extra staff, or, alternatively, offer mostly idle workers unpaid time off during slow periods.
You also need to face the hard facts about underperforming workers. Few business owners enjoy firing anyone, but it makes little sense to continue to pay poor performers.
Are you getting the most out of your company’s combined purchasing power? You may have different departments independently buying the same supplies or services. A few examples include paper, computers, and photocopying. By consolidating such purchases, you might be able to negotiate reduced prices.
To strengthen your bargaining power with suppliers when seeking discounts, pay your bills promptly. Even if it doesn’t help you land reduced prices, you’ll avoid late payment fees and credit card interest charges.
But don’t just continue to pay bills mindlessly. Review all of your service invoices — especially those that are automatically deducted from your bank accounts or charged to credit cards — to confirm you’re actually using the services. Consider canceling any services you haven’t used in 90 days.
When accounting for marketing expenses, you might notice your advertising costs taking a significant bite out of your budget. Advertising tends to be the priciest efforts with often the lowest returns on investment. Cut programs and initiatives that haven’t clearly paid off, and move your marketing to social media and other more cost-efficient avenues — at least temporarily. A single, positively received tweet may reach exponentially more people than a costly directory listing, print ad or trade show booth.
Resist the urge to solve your business cost control with one dramatic cut, as the risks are simply too high. The better approach is to execute a combination of incremental actions that will add up to savings. We provide various accounting services and specialize in finding the best ways to reduce costs for an organization. Contact us for a full assessment of your company’s budget.