Cost cutting is a healthy business practice that should be routinely performed, even when your business is doing well. At times like these, the task is fairly straightforward and you can perform the operation with clear objectives. On the other hand, when your business is in trouble and your financial crisis is growing, you begin to lose focus and start cutting every penny in every corner.
With this approach, a lot of businesspeople cut the wrong costs, sometimes even cutting the lifeblood of the business. They start cutting advertising and marketing costs, and guess what?
They just cut their own throat. They just killed the resource that could bring their business out of its crisis. Instead of cutting marketing and advertising costs, an effective plan would be to increase your budget in those areas by shifting the funds from other places where you CAN cut costs.
How is this possible? What do you do? Well, you're in crisis mode. Step back, take a breath, and do the following:
1) Figure out the problem that is causing your financial crisis.
2) Change your approach and focus your business.
3) Set up a campaign to implement this new approach that will draw in a lot of traffic which can be converted into revenue.
Here's an example:
Problem:
You have a computer store, and you find out you have over extended yourself with too many product lines and accessories that don't relate directly to computers. They are just bogging down your business with too much inventory, extra staff, extra storage, insurance, etc.
Change Your Approach:
You determine that it would be more manageable to become a specialist in computer sales and repairs. (This would also be a good time to add a HOT new product line in the computer department.)
Your first step is to eliminate the following departments: office supplies, office furniture, and cell phones.
