With a recession, many businesses are in the position where they are looking to cut overheads. How do you do this without having to make anyone redundant? How can you do this without having to trawl your financial reports? If you’re looking for ideas on how you can cut your overheads to get through a period of negative economic growth a recession, here are 5 steps that you can take:
How to reduce your overheads
1. Business processes automation
What processes can you automate or eliminate? What tasks can be passed down the hierarchy or outsourced to reduce wage costs and free up staff for work of a higher value? How can you streamline your workflow? What do you do for clients that doesn’t really add value?
While the answers to some of these questions may take an initial investment, such as automating your processes, the increase in efficiency and productivity will save you in the long run.
2. Employee engagement
Your employees are the ones on the ground, they are doing the tasks and are experiencing the potential problems and inefficiencies first hand so involve them. Ask them all the questions above that you’ve been thinking about yourself. They may come up with some great ideas that you haven’t even thought of.
3. Create a culture of continuous improvement
Make the first two steps a continuous process. For example, in every weekly team meeting, ask your team members to identify one thing which can be improved or made more efficient. If something hasn’t worked or hasn’t been delivered on time, analyse the process and see what changes can be made. If you give your team members new objectives that aim to improve the efficiency of the business, you’ll soon see that you will all start improving the way you do things naturally.
4. Get tough on low performers
You can’t afford underperformance normally, never mind during a recession, so now is the time to address this. While setting individual targets and having regular check ins will work for some employees, others will need a bit more support. Maybe they need more training in the areas where they are struggling or for a particular software. Maybe they need to be put onto a formal performance management procedure.
5. KPIs – to monitor and measure success
It’s all well and good talking about positive changes and implementing them, but you need to know if they are indeed making you more efficient and productive as a business. To do this, you’ll need to decide on your KPIs and you need to measure and monitor them. Once you have these figures, review them regularly, and you’ll be able to see if the changes you are making have been worth it.
As well as reducing business overheads, increase efficiency too
The best changes, especially during a recession, are those that increase productivity as well as reducing your costs. That way, you don’t have to let anybody go and you don’t have to reduce hours. It’s all about working smarter.