The crux of the situation as many business owners know is consumer spending. As we plan and strategize growth, many of us wonder if our businesses will be around this time next year. Even firms such as my own that concentrate on business services are feeling the crunch that has become the personality trait of this economic climate. If there is a strain on the middle class, many of my customers won’t have customers. If they have no customers, they have no revenues to retain my services and the list goes on and on. Owning a business is hard, but what can we learn from this fiscal cliff?
Cost reductions have to be smart
When we have to tighten our belts the first things we cut are things that we think we can do without. My firm has seen time and time again, that some of the cuts meant to help are actually what has done the most damage to the company. So when you look at your cash flow and start searching for the expenses in your operating budget that can be cut, ask these questions first:
- Does this cut make sense for my long term growth and strategy?
- Will this cut affect the quality of service I am able to provide my customers?
- Is this cut the only way to save money?
Long term strategy saves money
Many entrepreneurs hate thinking about strategy because we are by nature visionaries, but strategic planning is the key to avoiding Band-Aid reductions that lead to more harm than good for your organization. The key to strategic planning is understanding where you want your company to go and that takes a visionary.
Cuts should facilitate an actionable solution
Cutting down on operating expenses is always on an entrepreneurs mind, the thing is that your cuts have to be accompanied by actionable strategies. If you don’t change the way you do things, those cuts are going to be made in vain. More importantly the cuts are not going to help and you will be stuck with the same amount of work with fewer resources.
When everyone is looking to you for the answer, you need to be able to think the solution through in terms of what is best for your company and your employees. That’s called strategic thinking and as we dangle above this cliff with the rest of the country, we are the uniquely position few that can directly affect how we fall.
Excellent advice, Leona! This strategic and positive approach to navigating through difficult financial times is so much better than the short-term, strong-arm tactics so many executives at large companies are using.
Thanks Susan!