Clever planning and good leadership can ensure that you survive the current recession; great leadership will see you come out of it in better shape than you are in now.
Cutting costs – what should you do?
Many managers and accountants will advise you to cut spending, reduce staff and ‘batten down the hatches’, but is it the best course of action?
No, it isn’t. This is actually a knee jerk reaction that lacks initiative as well as social responsibility. Yes, your business may survive the recession – but at what cost?
Last week I attended a business function about recession proofing your business. One of the speakers was an economist representing a large, well known accounting firm. He told of how the company he works for has been advising their clients to cut costs and he gave an example of how their own business has started to save money.
He said that they have minimised business lunches and they have cut out all ‘unnecessary spending’. He went on to give examples of eliminating excesses, such as, no more flowers in the foyer.
He said that for years they have had a big bunch of fresh flowers delivered each week and put in the foyer and that this made the office look nice but it didn’t serve any business purpose.
Spoken like a bean counter I thought. ‘Hello’, I said – you really haven’t thought this through. What happens to the florist? what happens to the restaurateurs? Aren’t these the same types of business that make up your client base?
I pointed out that this sort of action is actually fueling the recession and in fact cutting spending is one of the biggest mistakes business owners and individuals can make. (The others being to reduce staff and to cut advertising budgets.)
What is a better solution?
By canceling the contract with the florist, the accountancy firm has effectively transferred their financial burden to the florist. The effect on a small florist will be bigger than it was for the much larger business, and so it will have greater effect – on the florist, their staff, the driver, the grower and so on.
Instead of canceling the contract with the florist, the accountancy firm should think more strategically and ask themselves, ‘how can we retain our contract with the florist and get better value from the flowers we buy?’
I suggested that they could spend the same amount, or even a little less if they were really struggling, on flowers but have them delivered as individual flowers. Then get the accountants or the receptionist to give each client one flower with their compliments.
This would result in wins all round. Everyone is still employed and the staff of the accountancy firm will feel better because they are giving their clients flowers. The clients will be blown away by the extra little touches their accountants offer.
And how many other accountancy firms give their clients flowers? It isn’t the emotional reaction you expect from a number cruncher is it? So what if the firm begins to get a reputation as being approachable and caring – is that such a problem?
By keeping the florists, the cleaners, the restaurateurs, the gardeners and everyone else employed, we will all stave off this recession together.
The bottom line
The bottom line is that we must all think a little harder and little more strategically if we are to all survive and thrive in the coming years. What you do today will set the tone for your future success.
Now is the time to cease the opportunity and innovate your way to success.
About the Author
Chris Edwards is an Executive Coach who specialises in Staff Performance and Leadership Development. He is the youngest 'City2Surf Legend', and as a personal coach, he will apply the same focus and tenacity toward helping you achieve your goals as has powered him over the line year after year.To discover how you can benefit from working with a personal performance coach, Contact Chris at Life7 to discuss your unique requirements.
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