Business Expenses You Can Reduce (If Not Remove) to Survive The Pandemic
In times like these, the uncertainty, fear, and doubt in the market can instill paranoia in business leaders, causing irrational decisions to be executed without much consideration. One example of this is how quickly the pandemic-inspired panic has led to record-high levels of unemployment.
The legendary investor Warren Buffett has famously said, “Only when the tide goes out do you discover who’s been swimming naked.” What Buffett means by this is that businesses that are highly leveraged with debt may look successful and healthy when markets are flowing, but when markets ebb they are the first to downsize, declare bankruptcy, and disappear.
Despite everything that’s going on in the global economy, businesses with a continuity plan, rainy day funds, and fiscal responsibility will come out of a recession or depression in an even better place than they were before. If you want to learn how to responsibly cut expenses in the wake of COVID-19, here are a few tips.
Wasteful Management Expenses Must Go
We’ve all heard of that company that wastes an ever-increasing amount of money on their annual retreat just so they don’t lose the budget for next year’s event. Or the company that hires expensive architects to build incrementally better feng shui to inspire collaboration. They’re not even called offices at that point; they are classified as campuses.
Offload Your Office Expenses
Even if you don’t have a sprawling campus, one expense that can be reduced significantly, if not eliminated, is your office space.
One thing is becoming clear to many businesses in the wake of the worldwide quarantine—the ability to sustain with a fully remote workforce. We can optimistically view the quarantine as an involuntary test of whether a distributed workforce can work for your business. If you’ve been able to sustain normal levels of productivity, then you are almost certainly reconsidering the need for that expensive office space that has gone completely unused.
Even if your business relies heavily on face-to-face collaboration, letting employees work from home a few days per week can boost productivity, morale, and more. If you implement a desk-sharing strategy, allowing segments of your team to work remotely on alternating days, you can greatly reduce your real-estate requirements and expenses.
Cut Perks, Not Culture
Many companies pride themselves on lavish perks like free food, on-site amenities, and more. This can be advantageous for attracting top talent and boosting company morale, but there’s something more important than perks in an economic downturn: jobs.
Business expenses like these are certainly expendable, while other culture perks like 401K matching are important to all employees. In times like this, however, temporarily reducing or suspending 401K matching and other perks would likely be acceptable by most employees if it meant saving jobs.
Perks are not culture; your culture is built through the people and the attitudes they bring to the table every day. You don’t need great perks to survive, but you do need great culture.
Business as (Un)Usual
We are certainly in a new phase for global business. Commerce between countries, states, businesses, and individuals could be changed forever, and as business owners we must adapt. The ability for a business to pivot and remain agile in the face of uncertainty can mean the difference between success and failure.
Business “as usual” may never be the same again, but with planning, execution, and fiscal responsibility, your business could come out of this in better shape than it was before the pandemic.
If you want more tips for expenses you can reduce or remove from your balance sheet, refer to the piece below from Embroker with 16 business expenses to reconsider.