If revenue hasn’t come back as fast as expected, it may be time to review the budget and determine if some planned expenses can be cut. Here are five places to look to do just that.
Since most events have been moved online or cancelled altogether, the company can likely redirect any money budgeted for travel this year to other more urgent expenses. And if these were prepaid items, it is often possible to get a refund. Hotels have flexible refunds up to the date of the stay unless there was a prepaid deal. And airlines have begrudgingly provided refunds, although in some cases, it did take time to get them.
Now that so many employees are familiar with Zoom and other videoconferencing tools, it may be time to rethink any future travel requirements that could easily be accomplished virtually with a much lower budget.
While it’s never a good idea to cut training, there may be ways to deliver it more affordably. It is possible to purchase subscriptions to online courses that include an “all-you-can-eat” component to them. A good example is Lynda.com, now owned by LinkedIn. Skillshare, Masterclass, and Udemy are a few other options.
Any unnecessary training that can be delayed is another way to free up funds. Alternatively, if there are employees who are worth keeping but have little to do, investing in training can be a great way to use their downtime.
3-Dues and Subscriptions
If money is tight, evaluating memberships is one area that may be able to free up money. Especially since many in-person events have been cancelled, this might be a good time cancel any renewals that are not able to be fully utilized.
Subscriptions are also something that can be renewed at a later date, when cash flow is optimal.
If employees are provided with benefits and times are extremely lean, cutting them is an option to keep from laying off workers. Some of the options might be:
• Disallowing overtime work
• Stopping coverage of paid volunteer hours
• Restructuring employee bonuses to align with profitability
• Eliminating perks like movie day, free car washes, or onsite chair massages
• Cutting education expenses if the company pays college tuition for some employees
• Cancelling employees’ memberships and subscriptions as described above
• Reducing training budgets as described above
• Converting event attendance and sales meetings to online versions
• Reducing vacation or holiday pay
• Cutting down on health care options such as vision and dental plans
• Reducing 401(k) matches on a temporary basis (watch out for plan requirements, though)
• Cutting regular hours
All of these are steps to take to avoid having to reduce your workforce.
One painful, and hopefully last place to look for more cash is the workforce. If work has slowed due to demand, the company can raise cash by furloughing or laying off workers. Unfortunately, many businesses have already had to do this.
By looking deeply at all business expenses, and combining cuts from these categories, hopefully your company can survive difficult times. These decisions are hard, and it can be helpful to have a second opinion before making significant changes. Don’t hesitate to call Lucrum to talk about your situation specifically. We can help you take an objective look at cash flow and make some recommendations.