Published 29 April 2020. Some rules have changed since; ask us for the current position.
Cutting costs during a crisis helps a business hold on and avoid a cash gap. Spending needs particular attention during the coronavirus epidemic, since no one knows for sure when the quarantine will end or what will happen to businesses next. The entertainment and tourism industries have been hit especially hard, and many have frozen their operations entirely.
What are the most important cost-cutting measures for small and medium-sized businesses?
The top priority right now is to cut costs as much as possible. Many companies are taking drastic measures and negotiating rent and loan holidays with landlords and banks. As a last resort, you can obtain a force majeure certificate from the Chamber of Commerce and Industry (ТПП, Торгово-промислова палата). However, you will have to prove exactly how the quarantine affected your ability to meet your obligations. To get the certificate faster, you can turn to lawyers or try to reach an agreement on your own. Either way, you will need to analyse your budget closely and decide which cost items can be reduced.
Think about the future
As the head of the business, answer a few crucial questions:
- how will cutting costs now affect the company in the future?
- what will happen if you leave costs as they are?
- what alternative solutions to the problem can you find?
To share information and experience with other business leaders, it is worth attending webinars, online courses and round tables. Check which business events on this topic are being held during the quarantine.
At the same time, cutting spending on phone and internet services can also help during a crisis. Some companies reduce what they spend on long-distance and international calls. Try it yourself: draw up a standard or policy for phone calls and make sure your staff know about it.
Reducing spending on external consultants
As the Chinese strategist Sun Tzu said, a leader who does not seek to buy information, an indecisive leader, will never succeed. For all the benefits of working with external consultants, though, the question of how effective that work is comes up again. Choosing among the many anti-crisis offers is even harder than before the crisis. Naturally, each consultant will play up the importance of the problem they specialise in. If your company has worked with an expert for a long time, it is better to keep that business relationship and continue to use their professional services. This will help the business get through hard times.
Learn more about strategies for getting through a crisis: order accounting services and the services of an auditor at Key Solutions today!
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