Businesses have been hit terribly hard by the recent pandemic, leading to many of them shutting their doors forever. The Washington Post advises us that over a hundred thousand small businesses have shuttered due to the pandemic’s impact on the economy. For the companies that survived till reopening, the shadow of responsibility hasn’t dissipated over their operations. That’s why businesses need to take stock of their business expenses and seek to shave off the unnecessary ones. In this article, we’ll look at how a company can reevaluate what they see as necessary expenses.
Expenses from Management Activities
Essential cuts need to take place from the top. It doesn’t matter if you’re running a tech company or a home care agency – management needs to shoulder a significant portion of the load. To start with, massive floor space dedicated to executive offices need re-evaluation. Instead of renting large offices, businesses might consider using temporary enclosures to subdivide large offices into smaller ones. Alternatively, if the company can manage it, reducing the cost of the office altogether can be a consideration to explore.
Another overlooked expense that doesn’t show up as openly on the record books is technical debt. The tech industry coined the term technical debt, as Dzone explains, relates to compromises in development that affects the final product so much that it may cause problems to the company in the long run. From a non-tech perspective, the term “technical debt” is still valid. An excellent demonstration of the phenomenon is when executives make decisions that eventually come back to impact the company’s product in later years. Dealing with technical debt is as important as dealing with financial debt. Companies shouldn’t overlook the opportunity to remove as much of their technical debt as possible, even if losing executives inclined to make those decisions is the result.
Expenses from Human Resources
The HR department deals with managing payrolls and administration of employees. Keeping business expenses down can be as simple as controlling the perks that the business offers to its employees. Balancing these employee perks can be a delicate matter, as some employees only joined the company because of the perks they were delivered. Removing those perks means that talented employees might seek employment elsewhere, where the grass is greener. Staples of a permanent job such as a 401k and healthcare coverage may need to be revisited to see if the company can cut costs on their payments.
Employees’ contracts should also be revisited, and here, again, is a balancing act between offering too much and too little. Intelligent decisions can be made to help the company, though. Compensation structures can be redeveloped, offering employees a lower base salary with the rest made up in bonuses for performance or goals. This restructuring also helps the business pinpoint employees that aren’t pulling their weight and might help the business efficiently cut its workforce.
A Different Business Environment
With a contraction in the global economy imminent, businesses need to figure out how to manage business expenses practically so as not to hamstring their company. Efficiency is the name of the came when it comes to expenses post-pandemic. While saving jobs should be among the major concerns for a company, the overall health of the business should be just as vital. Businesses will not be able to escape the economic contraction completely. However, with smart management of their business expenses, they may be able to escape relatively unharmed on the other side of it.