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The lessons of the crisis economies or reduce expenses wisely

Despite the crisis, life does not stand still, profit continues to exist and money still needs to be earned.

How to approach the crisis situation from an economically competent point of view? The postulates of Economics state that ” it is necessary to review expenditures by reducing them.” This will bring more benefits than trying to earn more money. Top managers know the secrets of what and how to save money, and what costs are best left at the same level.

The lessons of the crisis economies or reduce expenses wisely

First, let’s look at the most classic, traditional methods that many people know about and use:

1) revaluation of the budget with reduced cost items;
2) review of planned payments and expenses.

Which payments and expenses are most likely to be cut in a crisis?

– this is the cost of training,
– advertising and marketing expenses
— the cost of recruiting and searching for new staff (by the way, this phenomenon has its name – hiring freeze),
– maximum reduction of all possible current expenses (travel, transport, office expenses, as well as part of the social package, such as free tea and coffee in the office for all employees),
– savings on payment of bonuses and bonuses,
– appropriate reduction of the company’s size (reduction of orders from outsourcers, freelancers, as well as reduction of staff),
— expenses for corporate events, team building and other entertainment events at the expense of the company,
– reduce costs by finding new suppliers with more affordable materials and lower prices.

These eight points are the main and most common. The vast majority of managers and Directors stop at the list and do not even try to “dig deeper”.

If we look at the business in the long term, we need to conduct a deeper analysis.

The lessons of the crisis economies or reduce expenses wisely

Before you start analyzing, building prospects and starting to act, you should try the easiest way — fast-tracking – look for the most expensive article or several articles in the list of expenses, reduce and enjoy the result. But this approach is dangerous if there is no analysis of effectiveness, ignoring forecasts of consequences, and no analysis of medium – and long-term prospects.

Another step that helps reduce budget items is to view absolutely all the articles with the questions “How much do I need to do this now?” or “Can I move this expenditure to a later date?”. If you get the answer “Yes” to the last question, you can safely transfer spending to subsequent periods.

After a long-term budget analysis has been performed, it is time to start short-term expenditures and analyze the schedule of the next planned payments.

Now is the time to make a decision to increase the accounts payable (of course, it is unpleasant, but what to do? Everyone turns as much as they can!). A list of companies to which payments will be made with a delay is compiled, and a number of negotiations are held with clients.

In addition to the above options, you should keep in mind a number of organizational points that will help significantly improve the efficiency of saving money.

1. Strengthening accountability and accountability

Stop trusting your employees completely thoughtlessly and out of control. It’s time to start counting time, money, labor costs, and money spent.

In most companies, management is only half-hearted, and all attempts at control in the” quiet ” time fail because people do not understand why additional control is needed.

In a crisis, the introduction of such a system of responsibility will not be so unexpected for the staff, and the results may greatly please the Manager.

2. Introduction of KPI-quantitative performance indicators.

Each employee is personally responsible for specific expenses in their area of work, and their initiative to save money should be taken into account in the form of a bonus to the salary.

Lessons of crisis economy, or reduce costs wisely

For those who want to make savings according to all the rules, there is a list of methods of intellectual economy, which allows you not just to cut the main items of costs, but also to consider the work in the long term, trying “not to throw the child out with the dirty water”.

1. first, you need to set your priorities correctly. It is not necessary to cut expenditure on the basis of the figures in the report. Try to look at the problem more broadly and find the least safe savings items.

2. Projects should not be closed, but frozen, so that at any time it is possible to return to the previous work.

3. Invest in promising projects. Do not think that in a crisis, you only need to save money – the right investment will not only save money, but also increase it.
Try not to miss interesting chances, even if it seems that saving is a priority.

4. Consider projects to increase internal efficiency. If you choose the right places to use your workforce, then after a while you will find that you are ready to enter the market with a more advanced and refined product than your competitors.

5. Engage in customer segmentation and discard those who no profit in it. Do you want to argue that this is wrong and will have a bad impact on the company’s well-being? Believe me, sometimes it is better to cut off all ties with clients who cause more problems than they bring in money, than to try to please them at the expense of your own funds.

6. Engage in marketing. Are you sure that advertising will not bring anything good in a crisis? In vain. Try to start conducting a competent marketing policy, organize promotions, develop new projects and be ready to make a profit.

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