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The Do’s and Don’ts of Budget Cuts for SMB’s

With a recession on the horizon, a lot of small to medium sized businesses are implementing budget cuts to stabilize their foundations. However, scaling back on spending doesn’t have to come at the expense of business growth. If you want to do more with less, these do’s and don’ts will steer your business in the right direction. 

Do this: Let your data lead the way

Do you have a clear picture of how your current budget affects your business on a daily basis? If you’re capturing the right data, you can begin your budget cutting process by evaluating the efficiency of your current budget. Having effective data can simplify your decision-making process and help you confidently trim expenses in the right areas. Which areas of your business are bringing in less money than they expend? What does your current cash flow look like? Are there any areas where you can improve without spending more? For example, would boosting your tech utilization rates bring in additional cash flow that would save you from hiring additional employees at the same time?  

Don’t do this: Base important decisions on incomplete information

Do you have a feeling that the limited data you do have isn’t as accurate as it needs to be? Somewhere along the line information got lost or it’s hiding in data islands that only certain employees have access too, making it difficult to confidently make budget cut decisions. Evaluating your existing budget and identifying the best areas to make cuts is a lot easier when your data is effective, thorough, and all in the same system. If capturing all the data you need involves a complex process of wading through disjointed systems and incomplete information, it might be time to implement business automation software like Tigerpaw so you won’t have to deal with these issues in the future. 

Do this: Cut back in inefficient or ineffective areas

Any inefficient or ineffective areas of your business should be evaluated for potential budget cuts if you want to amplify your cash flow and recession-proof your company. Maybe your business is still investing in legacy services that aren’t bringing in money like they used to. Maybe you’re spending a lot on marketing efforts that have worked well previously but haven’t maintained the same ROI in the past year or longer. Maybe inefficient processes are taking up a lot of employees’ time that could better be used in more effective ways, saving you from hiring additional employees for the time being. There isn’t a one size fits all answer, but finding cuts within your existing operating costs will help keep your business lean while protecting your customers and employees during challenging economic times. 

Don’t do this: Forget to invest in growth sectors

Cutting spending is a great way to maintain a lean bottom line, but make sure you aren’t cutting your business off from potential growth opportunities. While it can be more challenging to add new accounts during a recession, diversifying your services and providing existing customers with additional value can help you maintain a healthy cash flow and keep your business in great shape. When allocating your resources, putting money aside to invest in converged services can help you bring in more money overall and reduce the need for additional budget cuts in the future. 

Do this: Evaluate your technology

It’s important to evaluate your business’ technology needs on a regular basis and make sure you aren’t overspending on redundant, ineffective software. If you’re paying for a lot of disjointed systems that aren’t working well together, it might be time to invest in an end-to-end solution that amplifies efficiency in multiple areas of your business. If you want to make sure you’re investing in a professional services automation platform that helps you boost your bottom-line by automating time-consuming manual entry and other essential day-to-day tasks like invoicing, customer relationship management, and service order generation and tracking, utilize this free checklist

Don’t do this: Delay implementing essential upgrades and highly effective tools

Not having the right tools could be damaging your customer relationships, adding unnecessary time delays in your billing process, and compounding inventory nightmares that become a hindrance to your entire operation. If you’re hoping to grow your business during challenging times, it’s important to not delay tech upgrades and the implementation of highly effective tools that could fix a lot of your problems. Additionally, it’s important to maintain effective cybersecurity protocols. According to a recent OpenText Security Solutions report, “most (57%) small and medium-sized businesses (SMBs) are worried about their cybersecurity budgets being reduced amid a surge in ransomware”. While you might need to make some budget cuts, cyberattacks are a potential threat to your business that should not be ignored. 

Do this: Upskill and train the talent you have

While you might not have the budget to hire additional team members as you’re making cuts, allocating some funds for upskilling and training the employees you already have can be a wise investment. This will help your existing workforce take on more complex responsibilities as time goes on and it can have a beneficial impact to your overall company culture. According to PWC, 60% of CEOs say having a strong upskilling program positively impacts their company culture.  

Don’t do this: Overwork and burn out your existing team

High turnover rates can be costly for businesses, but they’re often overlooked in the budget cutting process. If you’re trimming your budgets down to bare bones and avoiding hiring new employees at the expense of overworking and burning out your existing team, there could be costly consequences coming. Make sure you’re creating a company culture that encourages healthy work-life balance and not stretching your employees too thin to avoid hiring essential talent.  

If your business needs to make some budget cuts for the year ahead, these do’s and don’ts will help you focus on the areas that allow you to do more with less. That way, no matter what the economic forecast is for the foreseeable future, your business will remain healthy, expand steadily, and thrive. 

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