BUSINESS SURVIVAL & GROWTH
THROUGH COVID-19 & BEYOND
a free virtual meeting
We often think we know our costs and that we've got them under control. Without a doubt times have changed and taking a new look at costs is vital. Again can be enlightening to a business.
Negotiate a rent pause or at LEAST a 20% reduction.
Especially if using a serviced office.
Example: Origin Workspace are not charging their resident businesses.
Offsets extra costs in equipment setting up and extra phone/internet/etc expenses by employees working from home.
Freeze Whole or Part of the Business
Are there any areas of the business that cannon function, as a result of low / no revenue or employees?
Which revenue areas or teams work best to freeze?
Negotiate with Suppliers
Is it possible for you to carry on trading in an area, if your suppliers can reduce their price to you?
A price reduction can support your suppliers too, by retaining some of their trade.
Of course, where possible take advantage of the current deals and offers.
For most businesses, salary increases and bonuses will be on hold.
Teams will understand this. And will want to know 'for how long'.
Prepare an answer, even if it's a partly I don't know answer. Consult your teams.
'for at least a year, we'll review again, and if we can reach x revenue/profit/cashflow again, we'll be able to bring back salary increases. Which are likely to be inflationary/based on performance/... '.
Give your teams as much information as you can.
The rational: lack of control is the biggest source of stress; people's first concern is 'what does the change mean for them', until you address this, people will not listen to what you want them to hear about the business.
Split Out Your Costs
Separate costs grouped together, in your P&L, can disguise cost creep.
For example, grouping (significant costs) in delivery fuel, delivery wages and delivery van costs, together into one P&L line, may mean you can't truly 'see' how these costs are trending.
A small increase over a number of years, can start to significantly undermine your profits (that's your money, that you're working hard for).
You know your costs, you see them everyday. But is it easy to see them everyday, for every cost, over a number of years, and keep them all in your head. And if they are in your head, what about the manager you took on last year or 5 years ago. This is how cost creep happens even in your business that you know inside out.
Especially now, cost transparency and visibility is important.
When revenue is growing, or there's positive cashflow, gradual reductions in profit can be hidden. With a radical and sudden drop in revenue and massive draw on cashflow, transparency on costs becomes far more important.
Future Cost Savings
Rethinking on spend now, can create ongoing cost savings for the future.
Especially if you haven't done a budget for a while.
Budgets uncover cost creep. I've seen cost creep add 20% to costs, meaning in one budget I brought in a 'no loss to customer delivery' saving of £300k pa.
Office space reduction or rethink/postpone/put off a future expansion move?
Especially now your teams are set up to work from home, with newly bought laptops.
Why a budget may be worth your time
Thinking and talking about your business, ... where you're going, and the route(ish) there.