Lowering expenses is in vogue these days, with companies cutting costs in every way they can. Although freelancers work on a smaller scale, that doesn’t mean that we’re immune to these pressures. In fact, we probably feel the effect of the economy on a more personal level. Our income isn’t just spent on business expenses, but on our living expenses, too.
It’s important to be methodical in order to cut costs effectively. Here are six strategies we can learn from companies that are tightening their belts:
Look at the facts and numbers when faced with a decision. It’s easy to jump to conclusions and make emotional decisions when you think your business is in danger. Most people seem to have an instinctive drive to be ruthless with their cost-cutting. In the corporate world, the basic knee-jerk reaction seems to be laying off employees. Whatever your instincts tell you, this is hardly the time for an uneducated approach.
Review your financial and sales records. If you have your own blog or web site, study its site stats. Check out the other metrics you have. If you’re not measuring anything in your business, now is as good time to start: you need these figures to base your decisions on.
Make your schedule as effective as possible. Companies that are hesitant to do layoffs are reducing employee work hours or providing alternative schedules such as a four-day work week. In some ways, this approach might be useful for online workers who have control of their schedule. Audit your work hours and see if there’s a way for you to spend less time on non-billable tasks. Find your peak working hours and use them as the center of your scheduling decisions so that you can maximize your productivity. Beware of getting caught up in internet time sinks as well.
Also, to increase profit, check if you have more time to work on other paying projects.
Limit business travel. With telepresence technology constantly improving, it rarely makes sense to travel for business. There might still be exceptions, such as networking events that are essential to your career. Many companies are making business travel less glamorous and more practical, which is a move which makes sense for freelancers as well. Stay with friends and family if you need to go out of town, or share accommodation with other web workers who will be attending the same events.
Go the extra mile for current clients. Why is this a cost-cutting measure? Generally, it’s much cheaper for you to keep current clients happy rather than acquiring new ones. Provide them with the best quality of work and customer support so that they won’t even think of taking their business elsewhere, even if your competitors might lower their prices. Give them a feeling of security knowing that it would be too big of a risk for them to let you go. By keeping them happy, you’re likely to get referred to their friends – a no-cost method of marketing that provides higher conversion rates.
Drop weak or unprofitable ventures and focus on the most profitable ones. If some of your products or services aren’t selling, even if you’ve made several attempts to improve them, then it only makes sense to drop them, at least temporarily. Now is not the time to devote your energy to unprofitable ventures that will only drain your time and energy as you try to look for creative ways to make them sell.
Don’t cut expenses that are crucial to your growth. While you’re busy working on your cost-cutting plan, remember that you’re not just supposed to think about how many dollars you’re going to save. There is something that deserves higher priority: the growth of your business or practice.
Remember that cost-cutting isn’t just about lowering your expenses. You should channel your costs in such a way that you’ll get the highest return on investment (ROI). If you use this thrifty mindset in a way that is complementary to your growth, you might find yourself thriving rather than just surviving in tough times.
Are you using any cost-cutting methods? Share your strategies in the comments.