How Small Businesses Can Cut Costs

As the impact of the COVID-19 pandemic continues to spread, many businesses are experiencing a serious decline in revenue. The hardest hit are small businesses, especially companies with fewer than 20 employees, because such small companies typically lack cash flow and capital.

In order for your business to survive this challenge, you need to focus on reducing costs, controlling spend and optimizing your workflows.

Here are some ways in which this can be achieved:

Take advantage of the resources provided by your government

Many governments came up with initiatives to support small businesses. Check out what measures your government has taken and make sure you stay informed, since these measures are updated regularly.

Find out what government support your business is eligible for and apply for it. Take advantage of these government resources to save your business and your employees’ jobs.

Review your leases

If fewer employees work in the office or everybody is working from home for the time being, you can take a look at your leases, such as printers, copiers or even the company car and see if you can cancel them, put them on hold or reach an agreement with the service provider, so that you don't spend so much money on services that you are hardly using at the moment.

It is likely that your service provider will be willing to make concessions for you in this situation, in order to ensure your loyalty on the long run.

Reach out to your utilities providers

You can try to reach out to your gas, electricity, water and other providers to see if they are willing to defer or reduce monthly bills. If you are not using your company premises, try to negotiate with them set estimated consumption at zero until you return to work. Provide them with meter readings.

Review your subscriptions

Chances are that at the moment you and your employees are going to work from home for a longer period of time or have returned to work, but work on alternate days, in order to limit the number of persons using the office at the same time and avoid infection. If this is the case, you might not need the same amount of office supplies anymore, at least for a while, so you can contact the suppliers and amend the subscriptions or put them on hold. Such subscriptions can be for toner, coffee capsules, paper supplies, general office supplies, etc.

You may also want to take a look at your internet subscription, parking rent or any other such costs. Cancelling your employees' perks, such as gym subscriptions or fuel cards for a while will also help cut the costs.      

If you intend to work from home for a longer period of time, you can also cancel other contracts and services, such as cleaning, waste removal or security services. If you have a company car that you aren't using, declare it off the road.

Get more affordable software

Software apps don't need to be very expensive in order to cater for all the needs a small business has. Think whether you really need all the features offered by that app you pay such a hefty subscription fee for.

If you realise that you never use half of the features you're paying for, maybe it's time to downgrade or switch to a less expensive app, that still provides all the basic functions you need. There is no shortage of good apps on the market that are inexpensive or even free. invoicely, for example, is an invoicing app that allows you to send an unlimited number of invoices to an unlimited number of clients even on the free plan. You can find such good value apps for most if not all your business's needs.

Retrain your staff

Hiring new staff comes with increased costs, so until the current situation eases a bit, you might want to put on hold hiring new employees and instead upskill your existing staff or train them in new skills where possible.

Also, try your best to keep your staff. If you have a good team, it will be hard and costly to replace them later. Even if some of your employees can’t do the jobs you hired them for at this moment, think if you can give them different attributions for a while. There are free or inexpensive online courses that can help you retrain your staff.

Negotiate with financial institutions

Credit card issuers might agree to suspend payment or eliminate interest to help businesses survive, so it's worth giving it a try. You can contact your bank, credit union and other small business lenders to see if they can suspend payments.

Move to a co-working space

The office rent is usually a big contributor to the monthly costs, so you should consider downsizing your office or even cancelling your rent and moving to a co-working space to enjoy more affordable and flexible payment terms.

Negotiate with suppliers

Try to negotiate reduced prices with your wholesalers, distributors, manufacturers and other suppliers. Although these businesses are also dealing with the crisis, it’s in their best interest to help their clients survive, even if that means a temporary decrease in profit for them. You can also negotiate relaxed credit limits and extended payment terms with your suppliers.

Find ways to adapt

It seems the coronavirus is here to stay for a while, so you might need to find a way to adapt your business to this changing environment.

Try to identify the new needs and concerns your customers have and  see how you can accommodate them. If you can offer any of your products or services online, do so. Coaching, training and workshops, for example, can take place online until things get better. Think out of the box and find new ways to connect to your customers.