Lessons from crisis saving, or reducing costs wisely

How to approach a crisis situation from an economically sound point of view? The postulates of the economy state that “it is necessary to revise expenditures, reducing them.” It will bring more benefits than trying to make more money. Top managers know the secrets of what and how to save money and which costs are best left unchanged.
Lessons from crisis saving, or reducing costs wisely
First, we consider the most classic, traditional methods, which many and many know about them:
1) reassessment of the budget with a decrease in cost items;
2) revision of the planned payments and expenses.
What payments and expenses are most often reduced during a crisis?
– is the cost of training,
– advertising and marketing expenses
– the cost of the selection and search for new staff (by the way, this phenomenon has its own name – hiring freeze),
– the maximum reduction of all kinds of current expenses (travel, transportation, office expenses, as well as a part of the social package, such as free tea-coffee in the office for all employees),
– savings on the payment of premiums and bonuses,
– expedient cuts in the number of companies (reduction of orders from outsourcers, freelancers, as well as reduction of staff),
– the cost of corporate events, team building and other entertainment events at the expense of the company,
– cost reduction due to the search for new suppliers with more affordable materials and low prices.
These eight points are the main and most common. The overwhelming number of managers and directors stop at the list and do not even try to “dig deeper”.
If we consider the business in the long term, it is necessary to conduct a deeper analysis.
Lessons from crisis saving, or reducing costs wisely
Fast tracking
Before you start analyzing, building perspectives and starting to act, you should try the easiest way – fast-tracking – look for the most expensive article or a few articles in the list of expenses, shorten and enjoy the result. But such an approach is dangerous due to the lack of analysis of effectiveness, ignoring predictions of consequences and the lack of analysis of medium and long-term prospects.
Set aside in the “long box”
Another step that helps to reduce the budget line is to look through all the articles with the questions “How much should I do now?” Or “Can I transfer this waste to a later date?”. In case of receiving the answer “yes” to the last question, you can safely transfer the expenses to the subsequent periods.
Short term strategy
After a long-term budget analysis has been carried out, it’s time to start short-term spending and analyzing the schedule of the next scheduled payments.
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Now is the time to decide on an increase in payables (of course, unpleasant, but what to do? Everyone is spinning as much as they can!). A list of companies to which payments will be made with a delay, and a series of negotiations with customers.
In addition to the above options, you should remember a number of organizational points that will help significantly improve the efficiency of cost savings.
1. Strengthen accounting and accountability
Stop trusting your employees absolutely mindlessly and uncontrollably. It’s time to start counting time, money, labor costs, and cash spending.
In most companies, management works only half-power, and all attempts to control in “quiet” time fail, because people do not understand why additional control is needed.
In a crisis, the introduction of such a system of accountability will be for the staff not so unexpected, and the results can greatly please the manager.
2. Introduction KPI – quantitative performance indicators.
Each employee is personally responsible for the specific expenses on his job site, and his savings initiative should be taken into account in the form of a wage bonus.
Lessons from crisis saving, or reducing costs wisely
For those who want to spend all the savings, there is a list of methods of intellectual economy, which allows not only to cut the main cost items, but also to consider the work in the long term, trying “not to throw out the child with ridge water.”
1. First you need to correctly prioritize. You should not cut the cost items guided only by the numbers in the report. Try to look at the problem more broadly and find the least safe savings.
2. Projects should not be closed, but frozen, so that at any time there is an opportunity to return to the performance of past work.
3. Invest in promising projects.

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