Rome wasn’t built in a day but the bricks were laid every hour. This is how big empires are built. And this is also an example of how big empires fall – crumbling under their own weight! After all, it is the little things that count.
In modern times, large companies are no less than empires themselves -they take years to build, sometimes even decades. However, while the companies may be big, they are ultimately businesses; they have to make profits in order to sustain themselves.
But in times of pandemic, more than the profit, it is cost-cutting that has taken precedence.
As per a recent McKinsey Quarterly survey, 79 percent of all companies have resulted in cost-cutting as a response to the global economic crisis caused by the pandemic.
With or without covid-19, however, cost-cutting ideas are not new to companies – large and small. Cutting business expenses is an indispensable way to save money and improve the money situation in the coffers. After all, every penny and dime counts.
Here is how you can save money with these top six effective cost-cutting ideas for large businesses:
1. Miscellaneous Spending: Start Small, Save Big
Take the first step by reviewing all the expenditures in your business and categorize them to see which expenses need to go. Cut superfluous expenses such as pizza parties for your employees or magazine subscriptions your company no longer needs.
It can be bigger too! Take this for example – a department at a manufacturing company was spending up to $10,000 a year on stationery and supplies without seeking approval from superiors and yet they found it tough to buy the much-needed overhead crane that cost $8,000, a report published in Harvard Business review found.
This is just one such instance. Take a magnifying glass and do away with everything that is not adding value to your company. Reliable accounting software can help you do this accurately.
2. Outsourcing: Focus on Core Competencies and Reduce Weak Links
Keep a focus on core competencies and shift the rest of the burden. Every company has a weak link that holds them back. It is better to shift the burden so that the same work can be done at lesser cost by professionals instead of hiring a whole department in-house.
Therefore, companies should consider hiring offshore remote employees to save such costs. They will be located in different locations and work for you remotely for your company. This will not only help in cost-cutting but also save office space and the headache of hiring competent people.
For instance, areas such as payroll processing, HR, customer service, IT operations, advertising, media planning, social media marketing, digital marketing, content marketing, and software development do not necessarily help in core operations but need skills and expertise anyway.
Also, some situations need non-critical tasks that can be done by just one resource for the short term.
Instead of hiring a resource in-house for full-time, your company can hire offshore remote employees or employees to design a logo for your product or services, sales leads, social media promotion, and other such things.
There are reputed outsourcing firms where companies can hire one professional or more and even build a team for short-term, part-time, full-time, and long-term, depending on the requirements of their project.
3. The Power of Internet: Modernize and Automate
Encourage virtual meetings instead of the usual follow-up client luncheon, cap on phone bills and use online communication tools, switch to cloud services instead of relying on paper and ink.
Harness all that internet has to offer. Invest in the new technology and shift communication and storage online. Tools such as Google Drive, Google Docs, Skype, and Zoom can help you with that.
This would cap your large landline phone bills, help you keep track of office activities and also save you storage space. You can also automate a lot of tasks on various software for taxes, bills, and other payments.
Moreover, going virtual will also enable you to cost cut away the secondary expenses incurred by the company.
4. Timing: Efficient Work hours
Time is money and wasted time translates to wasted money!
- Schedule business activities: Encourage employees to adhere to work schedules and set expectations for a reasonable duration of time spent on certain tasks.
- Minimize distractions and reduce burden: Focus on minimizing distractions for your employees and reducing needless work. This could range from putting a cap on unnecessary emails and social media during work hours.
- Track billable hours: There is software that keeps track of time spent on different work activities or projects.
Using efficient time strategies like these will help you optimize the work hours better and keep employees focused on their work.
5. Invest In Your Employees
Rewarding and investing in the employees may sound contradictory to cost-cutting but if done with the right approach saves more for the company than it seemingly takes away.
For example, consider structuring the salaries of your in-house sales team in a way that a fixed component is on the lower side and a larger share is allocated to their commission in their work.
It is also important to note that the company should retain a good resource instead of firing and hiring another employee as it costs 20 percent of their annual salary. This will increase the employees’ satisfaction and also improve their performance.
6. Get Sponsor To-Do Your Events
Your company is big, yes. But it can be made even bigger if the seminar or gala you are hosting is sponsored by another firm in exchange for advertisement or even discounts to your company’s services. Galas and seminars are also a great way of grabbing eyeballs.
This way the company will not only save big bucks on events but also help in networking – developing good relationships with different companies.
The Big Challenge of Cost-cutting Ideas in Companies
Most often companies tend to cut costs equally in all departments but they can be done in a better way and hence Mckinsey rightly says that cost-cutting needs to be intelligent.
An important factor that needs to be taken into account is that cutting business expenses doesn’t necessarily have to mean attacking the headcount as it invariably translates into an “uncontrollable” workload. The cost cut has to create value and cut down the unnecessary frills.
The above-mentioned six effective cost-cutting business ideas should help you restructure the processes in the company and get the most out of it.
The report added that companies should cut costs starting with shifting their focus from organizational structure to current and projected strategic needs and trends for their businesses so that they make informed decisions rather than hurting the base of the organization.
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