MARCH 2020 ANSWER TO THE QUESTION OF THE MONTH: If there was a downturn in the economy, what 3 things in your business could be eliminated and your company would still run effectively?

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If there was a downturn in the economy, what 3 things in your business could be eliminated and your company would still run effectively?

I’ve started the process already.

  • Walk-ins and phone calls have gone down dramatically.  No need for a receptionist, laid her off last Friday.
  • Stopped all non-essential purchases.
  • May need to cut back hours.
  • Consider eliminating someone else.

  What is not essential to operations?  Do a hard analysis of “must-have” and “nice-to-have”:

  • Advertising.
  • Labor costs.
  • Mentally get your head in the game, my role is to find positives to share with my clients and prospects.  You can quickly go from having a “it’s not so bad” mindset to “gloom & doom”.

 Cut back on my accounting and payroll services.

  • Evaluate supplied products.
  • Reduce the disposables.
  • Hire one person full-time instead of six part-time people.

  Payroll – reduce staff.

  • I would eliminate some of the professional organizations I belong to.
  • Eliminate the frills in the company – be on top of every dollar going out.
  • I use a lot of plastic, I would try to negotiate better pricing with the vendor, maybe even look at other vendors.

 You can always save a dime, no matter what.

  • Cut the night shift, that would save an immense amount of money in electricity.
  • Look at the people – night shift managers, different building managers.
  • Cut some customer and employee relations as well as outside consulting. (donuts, contributions and outside consulting services.)

 What kind of reality are we talking about?

  • Hold on to your cash.
  • Turn down the heat.
  • Buy crappy toilet paper.   “Hey, you’re fighting nickels and dimes here.”
  • It’s all labor.
  • We would close the door on Monday.
  • We do a lot of meals for our employees – eliminate that.
  • Eliminate outside travel (trade shows), bring webinars in-house.
  • Reduce professional services and outside support contracts.
  • Streamline how I do my buying – with perishable products, it’s a challenge.
  • Cutting back – labor, non-perishable inventory.
  • Review our “give back” – consider more carefully, especially when the organization is looking for cash.

My brain went into disaster mode:

  • Office manager’s position could be spread among many (eliminate a position).
  • Reduce intern hours.
  • Staff meals, outings, community involvement and giving could be reduced.

In evaluating the last two years, we’re spending company funds somewhat carelessly.

  • Eliminate temp positions first.
  • Scale back on profit sharing.

Cutting back personally:

  • My own salary and don’t purchase a new truck.
  • Cut one of two people I have.
  • Cut some R&D projects that don’t provide immediate growth.
  • Reduce inventory – went down from 8 weeks to 30 days.
  • I already run with the mentality of lean, so it is hard to decide three things to cut back.  I would advertise only what the market will bear in peak season.
  • Include everyone in the decisions on cutting expenses.
  • Push the control down to the lowest level.
  • Make it fun and make sure to give praise.  It’s amazing what people will do when you let them.

A downturn is good for most companies.  There’s a lot of fat and spending money without thinking about it.  It helps get costs in control; we had 20% growth last year and made less money.

  • We would look closely at the support roles in the shop.
  • We’re a union shop, so cutting labor is hard.
  • If work slows, we could shut down a heat treat line and save $20,000 in electricity each month.

A lot of questions about what is happening and for how long.

  • Labor.
  • Cutting salaries and/or hours.
  • Sometimes we do better than others in a downturn because of our products.
  • When we see a weakness, we try to get ahead when doing quotes, trying to ensure our costs are covered.  Hit it hard quickly, it helps a lot.
  • There are tons of places to cut costs and expenses.  We would look at everything.

I would like to try to sustain through it, I wouldn’t reduce marketing or sales.

  • Examine what we do to fuel growth, make sure money is spent on the right things – or eliminated if necessary.
  • Eliminate one position / absorb the duties.
  • Evaluate training and building for the future.
  • Turn our focus to cost reduction.

This is the fifth recession our business has weathered!

  • Cut non-essential employees.
  • Cut back on producing so much product.
  • Cut back on purchasing materials that go into products.

We provide onsite professional development seminars.

  • Since all our classes have been postponed, it saves driving and making copies and sometimes hotel stays.
  • I’ve been cleaning up paperwork.
  • We are Looking into doing classes online via Zoom or another program.

I’m a consultant, I office out of my home.

  • Cutting back on driving.
  • Have more meetings via phone and/or internet.
  • Consider learning a program where I could look at documents on a client’s computer from my office computer.
  • There are a few subscription software programs that I’m hanging on to – I need to evaluate what I really need.
  • I would drive less and ride the bus more.
  • I would evaluate the need for office space.  I could work from home if things got tight.

I struggled with this:

  • I could cut evening staff.
  • Get better at tracking exactly where my money is goes.
  • Look at where I could combine purchases and save money.
  • We might cut back on group activities with clients and employees.
  • Pass duties to other employees.
  • I’m a soloist and work out of my home.
  • The biggest challenge is how a downturn would affect my clients.
  • I’d work on marketing and sales conversations about how training would benefit their bottom line and increase morale.
  • Have the clients print their own color copies OR I’d settle for coloring front and back.
  • Cut back on the courses I pay for and take advantage of free resources.

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