Decreased sales, lost clients, closed companies, declined consumer confidence, this unprecedented time has threatened businesses throughout the world, but small businesses can be particularly vulnerable. Coronavirus pandemic has moved from a health crisis to an economic crisis and many small businesses have altered their operations drastically.
Apart from small business financing or grants from the federal government, there are other ways for business owners to mitigate the financial impacts of COVID-19. Controlling business expenditure is a thoughtful strategy to keep your profits up, cash flow positive, and business afloat in hard times.
If your small business is struggling to survive the COVID-19’s economic impact, consider these 4 tips to cut costs and maintain a presence through and even beyond a major crisis.
Curb Non-Essential Expenditure
Eliminating the bulk of your business’ non-essential spending, especially during hard times, can often save you from financial devastation. Here are a few important ways you can trim the fat and improve your bottom line.
Reconsider the equipment not needed: As offices are closed due to stay-at-home orders, some equipment might go unused. Try to return the tool/ equipment not needed to cut the costs but if you really need them to operate, try negotiating or defer the payment to a certain time.
Postponing non-essential purchases: This is a tough time and it’s vital to save as much as possible by delaying or cancelling some purchases. There could be several business expenses you can drop for now to help cut costs like computer upgrade, office furniture and vehicle cost. You can pause or close an account if a software isn’t essential to current operation. Although it’s true all the time, you may save a lot of money on energy and fuel by turning off unnecessary lighting and cutting avoidable vehicle expenses, especially if everybody is working from home.
Reduce office space costs : This could be the time to move your business from commercial spaces to some more affordable premises like from your home or go mobile. If you do need the office, you can also ask your current landlord to renegotiate the rent.
Cut Payroll Expenses
COVID-19 is a difficult time and too shall pass, but employees will remember how you supported them in hard times. No doubt, payroll is one of the biggest expenses of a company, and it’s an unfortunate reality that some companies are forced to lay off their employees, leaving them with nothing. Meanwhile, some small business owners are stepping up, carrying out their responsibilities diligently and working hard to keep their employees employed through the crisis.
Reduce working hours: Since most of the businesses are currently closed and income is limited, you can reduce employee hours, part-time work or limited days, to save on payroll. It’s an incredible alternative for the present circumstance since workers despite everything get their compensations while the businesses set aside cash and abstain from losing their top talent.
Work from home: Work from home not only keeps the business running smoothly during a crisis but also saves a lot of money. When employees are working remotely, companies can save on energy, utility, cleaning, and other costs.
Suspend employee benefits: Small businesses that contribute to medical, wellbeing, insurance, and retirement benefits could be temporarily suspended or reduced until the crisis ends. Increments, bonuses, and over time can also be put on hold. Employees will understand the situation and respect your decision if the measures are taken to save their jobs.
Salary cut instead of layoffs: It’s true that due to coronavirus outbreak, many employers cannot afford to pay to their employees. Depending on how deeply your business has been affected by the crisis, you can apply temporarily wage restrictions on all employees or only reduce pay for managers and executives. Though not perfect, pay reduction is still better than unemployment.
Invest in Affordable Marketing
Market your business on the cheap will not only help you to maintain your presence, boost sales, and stay ahead of the competition during COVID-19 but also save thousands of dollars. Here are some marketing ideas that work for your low budget in a crisis.
Social media marketing: Social media marketing is an ultra-cheap yet highly effective way to connect your customers during a critical moment. It is freely available and can help you increase brand awareness, boost inbound traffic, and improve sales. Since more people are online now due to wide closures and people staying home, it’s a great opportunity for you or any small business to stand out during a difficult time with the help of social media marketing. Start by establishing and updating your profiles on major social media platforms like Facebook, Twitter, Instagram, and YouTube.
Focus on strengthening your relationship with clients and customers: For establishing yourself as a thought leader of your respected industry you must communicate regularly online. You can join social groups, forums, and online communities and share valuable experiences and supportive tips. Also, you can share your challenges with communities and work together to find solutions.
Content marketing: There are many different types of content marketing, but none require significant investment. The best approach is to publish informative, relative, and engaging blog content on the company’s website. Blogging is a cost-effective way of marketing as you can essentially publish and promote your content for free. Make sure to update the content once a week that informs, educates, and entertains your readers in some unique and practical way.
It’s been said that “money begets money”, but now is a time to be frugal with your business. The frugal mentality is extremely essential for your small businesses amid pandemic and can help you invest your money wisely and control your spending.
Move your business to digital space: Office rent is one of the major expenses for most small businesses. Due to lockdown, most of your customers might be staying at home, which means no foot traffic to your store or office. Even after the COVID-19 crisis, it will take time to rebuild your small business economically. It is high time to consider selling your products and services online. It is a great way to cut costs and save money in the long run.
Negotiate with suppliers and service providers: You can cut costs and minimize the financial impact of COVID-19 pandemic through effective negotiation. From internet service providers and marketing services to office suppliers and vendors, you can try negotiating from your current providers or get the same services for better prices from the competitors.
Equipment and software: Expensive software and equipment can be a serious bite out of your wallet. In a time where businesses are facing a cash crunch, you can save money by using used or refurbished equipment instead of springing for brand new essentials. Besides, you can invest time finding if there are any free, cheaper, and open source alternatives to an expensive software. For example, GIMP is a perfect choice if you don’t have money to buy Adobe Creative Cloud subscriptions. Google Docs or Open Office is the best alternative to Microsoft Office. Blender is your tool of choice if your business is indulged in 3D animation. QuickBooks or Xero users might consider giving SlickPie a try.
Above mentioned tips can help you save some money during this crisis. You can also create cash flow forecasting to determine how much money you need to save and how much is available to spend.
The information in this article is not financial advice and does not replace the expertise that comes from working with an accountant, bookkeeper, or financial professional.
Image via FreePik