It’s no secret the coronavirus (COVID-19) has completely shaken up life as we know it. It has affected people, businesses, and industries in ways that no one could foresee.
During these unprecedented times, we need to return to the basics and take action to mitigate the risk of COVID-19 and economic crisis.
Hermann Simon, a business expert in strategy, marketing, and pricing, spoke with Universia Knowledge@Wharton and asserts that “those who understand the changes in customer demand and react with speed and enthusiasm will emerge stronger than ever from the crisis.” Having a cost-cutting strategy in place is a necessary measure to keep any business afloat during turbulent times.
The most common cost-cutting (no-brainer) strategies include the following:
- Freezing all discretionary non-essential spending – this includes costs that are not essential for the operation of the business, such as travel expenses, tuition reimbursement (you can still do in-house training), professional development expenses.
- Renegotiating terms with partners and lenders – compare creditors for the most competitive rate; then ask your current lender to match that rate. Call your landlord and negotiate for lower rent. Call partners and negotiate lower 90-payment terms.
- Reviewing business subscription costs – reconsider supplemental expenses and review necessary subscriptions, request payment deferment or special terms during the crisis.
- If lower headcount and manpower is required to run the operation,
look at reducing the hours of all employees so you don’t have to layoff one employee. Look at options like extended leave without pay, furloughs, or exchange workers with other employers.
- “Understanding customer demand and reacting with speed and enthusiasm” means looking at alternative business models - how to continue to generate cashflow during an economic downturn means being resourceful and QuarterWorld is a prime living example.
According to Simon, employers should combine multiple cost drivers into a flexible model to enable savings that will benefit the business long-term from a strategic perspective. Although we are in the middle of a crisis, we must carefully manage our actions to ensure we survive and the industry survives.
Embed recognizes these are unsettling times, we are working hard to get through this, together. And together, we will.