In selective ways, you have to spend money in order to give a business the capacity to recover and grow.
One problem is language. We should talk about saving money, not cutting costs. If you think only about cutting, it is hard to be creative. And it is possible to be creative about saving money. I'd say it's essential!
If you need to save money urgently, gather your senior management team for a no-holds-barred brainstorming session. You need ideas from a variety of different perspectives.
Look at those costs often thought of as fixed. Take property, for example. If you own your property, sell it and lease it back to generate capital. If you rent, devise a commercial plan that allows for a workable renegotiation. Regus has a number of high-profile clients who abandoned fixed office space in favour of our flexible workspaces. They found it saved on overheads and helped them became more productive.
Take a fresh look at your suppliers. You should be working with them as partners, looking for mutual benefit. Find common goals, like electronic ordering and invoicing that save time, paper and money.
We need to look at people, too. Sooner or later, most organisations will focus on headcount. Target productivity instead; if people are sufficiently productive then why would you let them go?
To make employees more productive you have to be prepared to embrace new working practices. By allowing staff to do much of their work from home they will cost less in terms of office space. Switching to video conferencing will help cut travelling expenses, too.
Finally, you need to look at your corporate culture. Encourage people to do all those little things to cut costs and reduce the impact on the environment. Don't print emails unless you have to, recycle and turn off computers at the end of the day.
In the course of exploring these you may find you need to spend money in order to make savings longer term. Spend on streamlining processes or investing in smarter systems and you could find your initial outlay recouped by a reduction in your company permanent cost base.
When it comes to hiring and paying staff, there's one good thing about tough economic times: they make more talent available. So when you find good people, pay and treat them well. Don't neglect staff training. If they can learn to get more done with less, you'll be making a net gain.
My attitude to spending is the same regardless of the state of the markets. When approached by staff I always ask: Would you spend it if it was your money?
If people answer no they won't find me reaching into my pocket, but if they explain why then I'm listening. The secret is to spend money on the right things at the right time; and there's no better time than when competitors are retreating.
Whatever the economic pressures, you have to retain a long-term view. Give yourself the chance to grow so you're in a position to take advantage when markets pick up.