Despite recent improvements in the economy, businesses are always on the lookout for the best way to maintain corporate fitness, and a lot of executives wrongly assume that repeatedly hitting the minus sign on their financial calculator is the way to go. Reducing funding for programs recklessly can quickly harm employee engagement, a scenario that companies should always be mindful of when trying to reduce overhead. Usually cutting out the fat is a good idea, but not when it does more harm than good. It is wiser to try and locate cheaper ways of doing the same thing, rather than just let people go or stop spending on critical interests.
Sales retention
Companies think that getting rid of marketing and advertising funds is a good direction to take when trying to reduce their budget. The problem is, who is going to spread the word about a business? Word of mouth can only take visibility so far, and if someone has had a bad experience, that input will deter foot traffic rather than boost revenue.
Finding new, smarter ways of spending the same money is a better idea, so being more strategic with funding can help loosen budgets elsewhere. Instead of relying on old paper mailers and radio ads, companies may want to consider smarter, cheaper solutions before reducing funds. Social media and mobile development can increase revenue, but it will require that marketing personnel keep their budget.
Customer service
Reducing salesforce may feel like a good direction for business banking because less will be spent every payroll period on employees. On the other hand, there may not be nearly enough workers to take care of all the people coming into the store or shopping online. Not only that, but having to wait a long time just to talk to an employee who is likely feeling stressed and overworked can hurt retention.
"If you are cutting back in areas where your customer is going to notice, that is a mistake," said Carol Roth, a seasoned business strategist, in a Business Degrees article. "Your best opportunity is to maintain or beef up in the areas that are going to impact the customer."
Change suppliers
Some businesses think that if they make deals with overseas entities for raw goods and other materials they will be saving money as compared to what they pay for domestic versions of the same things. On the contrary, the Washington Post wrote that U.S. services are faster and cheaper on delivery, as well as being easier to monitor. While international markets can confuse and complicate the transfer of goods from a manufacturer to the business, a home-grown entity will be simpler to track.
What's more, consumers tend to appreciate "Made In America" goods more than overseas brands. There are some shoppers who only will purchase such U.S.-made products and services, which can be good news for companies that want to inhabit an American-only niche. In general, showing dedication to the U.S. can increase public support, which can easily convert into higher foot traffic and revenue.
Small, local businesses should appreciate the effort to stay with other neighborhood companies, since they rely on consumers for revenue as well. When considering what to cut from a financial plan, but companies need to consider who these reductions will actually affect, how well the organization can function without those funds and if there are any outlays that reflect an actual over-expenditure of funds.