Times are tough and you don’t need to be a chief economist to predict that things are going to get worse before they get better. Many businesses will be looking at their financial reporting, including their forecasting with trepidation. The obvious (and necessary) way to get this equation looking better is to reduce your costs where possible. The first place most of your minds will go to is cutting labour, which may not be avoidable for some and is unfortunately one of the hardest parts of owning a business.
Before you take more drastic measures, here are a few other ways you may be able to reduce costs:
– ask landlords for rent free periods or reduced rental price
– are there any changes to supply agreements that could be negotiated?
– rather than going straight to redundancy, look at reducing team wages or hours, or standing the team down for a period of time
Often it’s as simple as asking the question. There are many ways to cut costs by putting the feelers out and seeing what can be negotiated. Why can’t you ask your utility, IT and any other provider necessary to operate your business, “we need to reduce the cost of this service, what can you do?”
This advice doesn’t just apply to business.
As an individual who may be finding hours cut or out of a job altogether, meeting rental, accommodation or mortgage payments could become stressful. There’s no harm in asking if your landlord would be willing to reduce rent for a few months, especially if you’ve been a good tenant or mortgagor.
Everyone is going to take a hit during the next few months and if we spread the load evenly, we’ll have more hope of getting each other through to the other side.
If your landlord, employee or suppliers don’t each reduce their cost by a little, then unfortunately they’ll be hit far worse in the longer term because you can’t sustain paying them all at the existing level if your business collapses.
However, it would be hypocritical to be asking these questions and, as business owners, not ask them yourself. We have stressed before, and do the same again, you must be brutally honest with all of your stakeholders. If you’re asking them to take a bit of a shave, it’s easier to ask when you can say that you are too. It’s all about giving and taking now more than ever. Think about more than your own back pocket. Importantly, be kind to one another and put yourself in others shoes. We’re in this together and we need to be mindful of that in business too.
Negotiating existing contracts can be tricky, so if you’ve got a matter that isn’t going to be simple to deal with yourself, we’re here to advise and act on your behalf. Let’s put our heads together and see where you might have some wriggle room to free up a bit of cash over the coming months.