When everything is said and done, the phrase “hindsight is 2020” will have an entirely new meaning and our collective consciousness will look back at this year as the year that everything changed. It isn’t much of a stretch to say that the first quarter of 2020 has brought the world to its knees and it’s fair to say that no one has been spared. In a matter of months, it would bring governments, organizations and entire industries scrambling to find new and innovative ways to deliver essential “goods” and services.
In the span of a few weeks the work landscape has changed from office buildings once filled to capacity to virtual offices and work-from-home models. As businesses struggle to find ways to stay connected and relevant to their consumers in a time were social/physical distancing is stressed, the challenges faced becomes universal
Many enterprises who were experiencing declines in revenue from the onset of this global pandemic were forced to re-evaluate their spending in order to stay above water. These are large organizations in all industries with large capital and solid infrastructure already built in. But what about the small businesses? The “mom and pop” businesses that rely heavily on the local community, what recourse do they have to keep afloat? Unfortunately for most, payroll costs are high on the list of actions that need to be taken to keep a business from closing down. Yet, letting go of employees to cut spending doesn’t always have to be the first option and many business owners don’t want it to be an option at all.
Modelling Uncertain Times- Best, Moderate, and Worst Case
A good method of modeling uncertain economic times is to look at alternative scenarios, with key indicators for each. This will let a small business owner look at their revenue in each case and working backwards, see what changes can be taken to keep the profitability that they are comfortable with in the interim, as economies and industries weather through this pandemic.
Whether large or small organisations, one thing is for certain, how a company responds during crisis tells employees, consumers, vendors, and partners a lot about its culture and true core values. Employees, clients, and the community will remember businesses for their actions (or inaction) during these times. It is highly recommended that a large-scale layoff should not be the first solution when considering options to reduce costs. Take a look at operational expenses; discrepancy costs such as travel, entertainment, overhead, and IT are areas where businesses can focus before looking at payroll expenses.
Utilising Government Programs
Another way for companies to reduce overhead costs is to try and speak with their landlords or utilize government programs for rent relief. Many buildings are being left vacant during this time allowing for utility costs to go down and regular building maintenance to operate at a minimal capacity. Some commercial landlords understand the difficulties and challenges businesses are facing and perhaps would be willing to help tenants.
Here is a detailed list of government relief resources designed specifically for small businesses in the US and Canada.
Supplementary Cost Reduction Measures
Additional cost reduction can come from taking a closer look at the internal IT infrastructure. Asking questions such as “is this process working?” and “does the current software do everything we need it to do?”. A very simple and cost-effective method is to check if your organisation is best utilising its current IT stack. From an IT software provider standpoint, many businesses don’t utilize their software to its full potential and haven’t had a refresh on how to use the software since it was first purchased.
It is highly recommended to call your account executive or customer success manager and have them in for a system review. In most cases these are billable services. However, in these times most vendors will work with you to ensure usage of their software so what used to come at a cost may be available for free or at a very limited cost. It never hurts to ask, and small business will know who they can turn to when they need help now and, in the years to come.
This is written with experience and transparency; Function Point is a full SaaS solution, meaning small and large businesses are able to have all their employees work remote. Contact your CSM for information about optimized workflow enhancements, or what other enhancements Function Point has done to its product to best support its clients during these difficult times. Making every penny count in this crisis means more employees with a pay cheque.
Lastly, if despite implementing all of the above recommendations your business is still not experiencing a positive cash flow and you have to look at payroll expenses, consider looking at reduced hours, elimination of bonuses, or furlong. This action although difficult, is a unifying one; at the end of the day when communities and individuals look back at this time, everyone can reflect and agree that businesses looked out for their employees.
During this time, it is important to consider safety, health, and your most important resource- your employees. In this regard, be sure to ask yourself and your organization “how will you be remembered when this pandemic is over?”