How to reduce costs in your business….in the right way
With rising prices hitting us all, we’re all looking for ways to cut costs right now, but if you make cuts from the wrong places and in the wrong way, ultimately you’ll pay a much higher price.
Just ask the Pizza Hut franchise in Scotland, whose recent attempts to reduce delivery costs led to driver walkouts, union involvement and potential legal issues.
The lesson? Cost-cutting isn’t just about influencing the numbers; it’s about HOW you implement changes you make too.
I’ve helped many business owners to trim expenses without damaging their culture or breaking employment laws – let me show you how to do it in the right way.
Start with a strategic approach
Before making any cuts, consider these two questions:
- Which costs are really draining your profits?
- What can you cut back on without affecting quality or service?
The best way to cut costs is to be targeted and thoughtful, not just slash everything by an amount you decide on then hope for the best.
5 smart ways to reduce costs:
Review your workspace needs
Have you mixed home and office working now into your normal ways of working, do you still need all that office space?
Some of my clients are saving thousands by downsizing premises or negotiating better lease terms.
You can consider shared desks, flexible arrangements or even co-working spaces if your team isn’t in the office every day.
Get your staffing levels right
Are you staffed correctly for your current workload?
Look at your busy and quiet periods. Could flexible hours, part-time contracts or seasonal staffing help you to match costs to income more effectively?
This isn’t about cutting jobs, it’s about having the right people in at the right times.
Streamline your processes
Inefficient processes aren’t just frustrating – they’re expensive.
Where are your team members spending time on tasks that could be automated?
What bottlenecks are causing delays and therefore overtime costs?
Simple process improvements can deliver immediate savings without reducing quality.
Handle sickness absence more effectively
Unplanned absence costs UK businesses an average of £554 per employee each year.
A clear absence policy, holding return to work meetings after periods of absence and supporting staff health overall can significantly reduce this hidden cost.
Keep your best people
The cost of replacing an employee can be 1.5 to 2 times the annual salary of the role.
Sometimes your most effective cost-cutting strategy is reducing staff turnover!
Regular check-ins, fair pay and chances to grow are far cheaper than constant recruitment.
What NOT to do
I’ve seen businesses get this wrong, much like the Pizza Hut franchise and others who’ve damaged their reputation with poorly executed cost-cutting:
Don't change pay or contracts without discussion
Changes to employment terms require consultation and agreement.
Rushing these decisions can lead to formal complaints, legal challenges and even walkouts.
Don't ignore the legal stuff
Reducing health and safety measures, skimping on mandatory training or cutting corners with minimum wage rules will always cost more in the long run.
Just don’t do it!
Never keep people in the dark
When staff suspect cost-cutting but aren’t told what’s happening, rumours fill the vacuum.
Be transparent about challenges while involving your team in finding solutions.
My final thoughts…..
I’ve seen how cutting costs can make or break a business, the difference always comes down to the approach.
With proper planning, open communication and a overall smart approach, you can protect your profits while keeping your team motivated and productive.
The smartest business owners I work with know that cutting costs intelligently today helps to secure growth tomorrow so if you need help with finding the right balance between savings and sustainability I’m here to help.
You can arrange a confidential chat about how I can reduce your costs without increasing risk here.
Author's Bio
Kat Derbyshire is the Founder of Black Kat HR Ltd.
She is a BMC Trusted Partner.
Black Kat HR are an independent HR consultancy who work with a variety of companies both on one-off projects and on a retainer basis.
An expert in her field, Kat can be contacted on [email protected]