“This too shall pass” — a Persian adage
The world seems like it’s turned upside down and inside out recently. Things that were working for your business last week are working against you this week.
When developing a new product for the market most ideas will be developed into a Minimum Viable Product (MVP). This is a version of the product with just enough functionality to satisfy customers and provide valuable information and feedback for the future. To survive the current crisis you need to transform your business into an MVB, a Minimum Viable Business.
We work with a client company whose sole purpose is to bring people together. For them, and many other businesses like them, the current goal is to keep their employees safe and the lights on until quarantine and infection risks return to normal and people can once again gather, like the social animals we are.
This first step in becoming an MVB is to review your Income Statement. Cutting costs and expenses is imperative before considering adjustments in your employee pool.
We’ve created a list of suggestions below that will assist your company through this financial crisis:
Advertising & Marketing
This budget could theoretically be set to $0. However, focused efforts should be made during times of attrition. If you have big budget creative marketing strategies, consider cutting back to simpler campaigns which still generate a lot of interest in your company. Online ads and targeted social media marketing are great ways to get bang for your buck. This could still allow you to market aggressively while cutting down on the total spend in this budget.
With the current COVID-19 social distancing needs all community events should be suspended. Redirect these funds to help stabilize another part of the company.
Dues & Subscriptions
What are you paying for every month that you could reasonably do without for the next couple of months? Do you have a premium music subscription? Yes, it’s only $10 a month to skip ads, but what if you found 20 similar services that you could cut?
If there are services you absolutely cannot do without, reach out to them and ask them how you can obtain support. We reached out to one of our software vendors this week and obtained 2 months of free service on a $990/month subscription. Asking doesn’t hurt. Many companies would rather offer you a discount than lose your business. Below is an example of some language we have used with our own vendors:
We’re experiencing attrition and pull back in revenues. Rather than just canceling outright is it possible to discount our subscriptions for the next several months? Any assistance we can get is greatly appreciated.”
Food & Beverage Services
A full suspension of food services during a viral outbreak may be required to reduce common touch-points when it comes to food and dishes. If you stock a kitchen or supply room for your employees, pause these amenities, providing both a safer work environment and lower costs.
Every office has a couple of those computers which takes five minutes to boot up. Nothing is more frustrating than dealing with slow, clunky and malfunctioning machines. But if it’s working, now is not the time to replace it. You may even find sales start to spring up as companies look to offload inventory. Nothing is better than a new computer at 50% off.
Increasing Job Descriptions
Digging deep as a team is necessary to make it through a crisis. Take a look at what needs to be completed in the next few months. Are you utilizing ALL of your employees' current talents and resources? Job descriptions may need to expand, but if you all make it through the crisis together, the strength of your team and the growth of your business is assured on the other side of this pandemic.
Meals & Entertainment
The greatest perk of any business, but realistically this can be suspended immediately to help ease company burden.
Repairs and Maintenance
Consider if something is essential to operations for the next few months before jumping to a repair. Is one of the three copiers in your office broken? Mike can go to the second floor to make a copy. Better yet, teach Mike the importance of digital documentation and how emailing a report to a client is quicker, cheaper and eco-friendly. Cutting back on non-essential repairs will help keep a reserve for essential maintenance to remain operational.
Cut all non-essential travel immediately. Many travel companies are offering free cancellations and rescheduling on booked transport. Most organizations and governments are banning or discouraging travel. Online meeting rooms have come a long way, and many meetings can be done remotely and from home. You don’t even have to put on pants.
A more frugal approach to office supplies during this time could help reduce spending in this area.
Suspending employee and customers perks would help the budget but not morale. However, there are some things that cannot be utilized in our current health crisis currently. If you provide gym memberships to your employees, chances are they will be closed or suspended for the next couple of months anyway. Pause those fees right away and any other service you cannot use during the social distancing guidelines.
Utilities, Bank Charges, Rent, and other fixed expenses
These budget items are hard to reduce by yourself. Their impact can be lessened if an agreement can be reached with each particular organization. Talk with your landlords about rent abatement. No one benefits if you have to close your doors and move out. Look to see what services can be reduced. Internet for example. Do you really need that 1TB line if most of the office is telecommuting for a couple of weeks? The same goes for your utilities. If your employees are all working from home, Stacy doesn’t need the thermostat set to a bone-chilling 60 degrees. Reaching out to your landlords, utility companies and banks could provide unexpected relief — but you’ll never know where you can get the help unless you ask.
This is the last thing you want to touch, especially in a time of need, but sometimes it’s unavoidable. Many companies in our area have already announced a 25% reduction to employee payrolls. We ran an analysis for one of our clients and found that giving their employees two weeks of unpaid leave had a more positive impact on the budget than cutting salaries by 25% for the rest of the year. If you can afford to close your doors for two weeks, give your employees the time to make sure they and their families are safe and healthy. Not only can this approach be better received for morale, and ensure you have a healthy workforce, but it also provides a benefit to your employees— allowing them to get something in return for their sacrifice.
All of us wish that things were different right now, but in light of our new reality, hard decisions need to be made. Be proactive and not reactive. Build your MVB, look after yourself and your employees, and remember: We’re all in this together. This too shall pass.