In business, there are smart ways to cut your costs and make your business more profitable, and there are foolish ways. As a business coach, I’m all for ‘trimming the fat’ when you are smart about it. Cut the right things and be clever on how you save your pennies. However, when you cut the wrong things, that’s when foolishness comes into play. Here are some things which you just should not trim, cut or otherwise skimp on.
Legal Professional Fees
These days it’s easy to get contracts over the internet. People are just copying bits and pieces from them to put together a mish-mash. The problem is that without legal training, we are often not setting things out correctly and in many cases making the document worthless. Go back and think about WHY you are needing a contract, agreement or some other legal document. It’s probably to protect yourself. Think about the potential cost associated if there is a problem. Now think about how bad it could go … in some instances, it could cost you your home, business, a stack of money, time and all that stress. Don’t be a fool and attempt your own legals. Quality legal advice is priceless.
Sadly business owners figure they will save a dollar or two by doing it themselves, or having their Receptionist or life partner (who may virtually have no skills or training in bookkeeping) to the bookwork. There is a statistic that says 5% of businesses fail due to poor bookwork. I personally believe it’s more. The issue is that poor bookwork means that you are basing decisions on incorrect data, your BASes are probably wrong (which when you’re audited is a whole other headache) plus your accountant is probably wasting (yes, wasting) time on fixing things up before s/he can even do your financials and returns. Of course, then they have to charge for their time … there goes that ‘dollar or two’ you thought you saved. Time = money. A good bookkeeper knows what they are doing, gets in there and does it quickly and efficiently and accurately; allowing you to rest assured the job is in hand and focus on your business. Don’t foolishly think that having an amateur (even yourself) is long term going to save you money or help your business – quite the opposite in my experience. Leave the task to a professional and focus on your business.
Another foolish way to cut costs (particularly if you are struggling) is to cut your marketing budget. Absolutely be smart about your marketing. Know what is working (or not), do what is effective, keep on it and keep it focussed and targeted. However, cut back on your marketing, delay getting your website fixed, or actioning the SEO and you’re just killing your business. Just take a marker to a large piece of paper and write on it “GONE OUT OF BUSINESS” … don’t wait the several months it will take – just avoid all that pain. Am I being a little harsh? Maybe, but I cannot stress enough the importance of marketing and promoting your business. Ideally, this should happen consistently, whether you are quiet or busy, in order to avoid the work levels’ ups and downs (the ‘roller coaster ride’ as I affectionately call it) … but especially when you are struggling, then that is not the time to cut on this expense. I am in no way saying, throw money at anything. Have a marketing plan, have a budget for your activities and work to your plan. Marketing can take a while to take effect; a client of mine, brand new to business took a couple of months to get traction with his activities – but now has (his words!) “work coming out my ying-yang” because he consistently stuck at it and stayed with the plan.
Staff Hours or Staff Training
If cashflow is tight, another area to cut is staff hours, staffing levels or staff training. Why, because you can’t cut your rent (short term) or your phone costs (unless you can find a better plan). So you cut staff hours, take on more yourself as the business owner, and instead of focussing on your business and its growth, you are instead working in the business. You are trying to do everything, getting little personal or family time, feeling stressed and barely juggling all the boys with any degree of success. If you have a great team (and they are not easy to come by) … don’t cut their hours (or worse cut them out), instead work that bit harder on your marketing and of course your conversion rate. It’s all very well to have a thousand potential opportunities coming in (leads) but if you do not turn those leads into customers (conversion) then what’s the point? As a business coach, I frequently work with clients in their marketing strategies, but also in their sales processes with a view to improvement.
Every business is different, but cutting back on customer service can be foolish too. Let’s look at say a large telecoms business. Let’s imagine they spend their money on staff resources for sales, but when it comes to getting a technician out, or getting your enquiry answered or your technical complaint handled – you wait hours on the phone to only get someone who cannot help you. People in this country expect a certain level of service and customer support. Cut an olive out of an airline meal service, who cares. Cut tens of thousands of jobs out of a large corporation so that the consumer has next to zero customer service and customers will be looking to go elsewhere. Yep, foolish.
This is one, where I still come across business owners who think they don’t need a website. If they’ve been in business awhile, this may have well been the case years ago, but these days, everyone is online, or they are not being seen. I know a number of quality website designers that charge really fair prices for high-quality websites that work, and work well. Think about this. How many of you have a Yellow Pages book in your home or business? Actually, I can’t remember how long since a Yellow or White Pages book was delivered to my premises. You might say “I get all my work from word of mouth” except when someone hears about you, the majority will first ‘check you out’ by looking for you online. No online presence, no decent website and quite simply, they just won’t call you. You will likely never know. If you’ve been in business awhile, and you’re honest, you will find the leads for new business are becoming less and less. Don’t blame the economy, blame yourself if you foolishly do not have a website.
Getting Help Starting Out
I’ve been business coaching awhile. Some prospective clients know they don’t know a lot and know they need help. They factor in professional assistance and coaching into their setup costs. They recognise that having an expert guide and support them will save them (and in fact) and make them a lot of money. Sadly some people need to have a tough year or two first, struggle, make some (sometimes costly) mistakes and then will come to that point of recognising professional help is worth its weight in gold. I appreciate though that many business owners start out with little or no setup capital, so I appreciate finding money that doesn’t exist can be difficult. So, if you’re thinking about starting out, don’t be a fool and have no start-up capital. You will likely need legal services, professional advice, accounting advice and structure setup, branding, funds to build a marketing strategy and then implement it, money for at least 4-6 months before the business takes off and starts generating you some income. Very rarely that you start day one of business with customers. Yes, I will say it: only a fool starts out without a plan, without seed capital and without professional support and advice.
The biggest fool is the one who doesn’t see the errors of his/her ways and doesn’t learn from his/her mistakes. Every day we learn something new, and the wise will take action to resolve shortfall or improve. I know a great deal of really great people who can help you – accountants, web designers, lawyers, mortgage brokers, bookkeepers, printers, branding specials, social media gurus and so much more. If you’d like an introduction, please just ask. A little tongue in cheek, but if you need to be connected to a great business coach – I’d like to put my hand up for that one. : )
Make a spectacular day!