A global recession is on its way!
By this time next year, a global recession is said to hit several developed countries, including Australia. And if you are running a small business in Australia that is under 10 years old, this will be the first time you have to deal with the economic downturn.
And business budget cuts will be critical.
Currently, you have time for adequate business budget planning for the upcoming year. Determining which business functions to cut down and which you shouldn’t is essential.
Now, most people instantly try to cut down business functions that take up most of the budget, such as marketing or staff. However, these business functions and a few more mustn’t be a part of your business budget cuts.
In this blog, we will tell you 8 things you should NOT cut from your business budget.
Staff
This is the first thing most small business owners think of cutting during business budget cuts. However, you must understand it is more difficult and expensive to hire new employees than to retain the ones you already have.
So, cutting your staff may seem like an easy thing to do, but it will be financially burdensome in the future. Instead, it would help if you value them even during times of recession. The more you value them, the more loyal they will stay and work hard during tough times. Don’t stop training your staff. Instead, keep some budget for staff training to increase your service quality to gain customers during this time.
Once you find a great employee, nourish them, value them, and see the wonders they do for your business during a financial crisis.
Marketing
Another thing most business owners find easy to cut down from the business budget. However, this could be a big mistake in the long run.
Yes, keeping the marketing efforts that work and scrapping the ones that don’t bring results can be beneficial. However, completely cutting down the marketing budget will be detrimental in the future.
During a phase like a recession, the spending behaviour of the customers will change. They will think twice before buying a product. You want the spending behaviour of the customer to be in your favour. In such a case, effective marketing will help you stay relevant in the market and bring in customers.
Hence, don’t cut down the marketing budget entirely during a financial crisis.
Technology
Time is money! Not only for you but also for your staff. Hence, if you are using any technology that saves you time, don’t cut it down from your business budget. For example, if you spend about $39 a month on an app that saves you about 3 hours on a task, you are saving a lot of money in the long run.
Hence, keep the technology helping you boost employee productivity.
Safety and Essential Tools
No matter the financial situation of your business, you mustn’t compromise on the safety of employees and essential tools. Hence, don’t cut the assigned budget for procuring safety gear and essential tools that enhance the overall workmanship of your team.
After all, a botched job will cost you your business reputation and customer loyalty in the long run. Hence, don’t compromise on employee safety, essential tools, and equipment.
Maintenance
During a financial crisis like a recession, maintenance of tools and equipment will be extremely important. Imagine replacing a tool or machine when you already have budget limitations. It will take a toll on your overall business operations.
However, if you keep spending on routine maintenance of essential tools, machines, and equipment, the overall expenses will be much less than buying a whole new piece. Hence, don’t reduce your equipment maintenance budget.
Customer Service
Whether you run an offline or online business, customer service is critical. A customer may come to you due to the product features, quality, and price. However, they will stay loyal to your brand only when you provide high-quality customer service.
Customer service not only includes answering critical questions of your customers. But it also includes shipping the product purchased ASAP, providing them with aftercare and timely maintenance services, giving them an insight into what’s coming, and more. Good customer service will prompt the customer to return to the brand time and again. Hence, don’t cut your customer service. If needed, you can provide your staff with customer service training to boost efficiency.
Innovation, Research, and Development
Don’t cut down your innovation and R&D during a financial crisis like a recession. Instead, this will help you pivot easily during these tough financial times.
R&D and innovation don’t always have to be about developing a new product. It can also include finding out new streams of revenue. As mentioned above, customer spending behaviour will change during the recession, and you want it to be in your favour. Finding multiple revenue streams, such as selling online or getting customer feedback to tweak your existing products, can be beneficial too.
Hence, don’t cut the business budget assigned for innovation and R&D.
Presentation
This is true for offline and online businesses. Presentation of your offline business premises and your online website will determine whether customers feel invited.
An office premise with a dirty and dingy area, insufficient couches and chairs, botched paint jobs, and more won’t look inviting to the customer. Similarly, having a business website with old and out-of-date website design, lack of responsive web design, outdated description, and more won’t feel inviting to the customer. This will, in turn, affect your business and revenue generation.
Hence, don’t cut down on business presentations online or offline.
Wrap It Up
Business budget cuts will be essential during a recession or any other financial crisis. However, you need to be mindful of where to cut down completely and where to still allocate your budget.
If you want more insight into how to navigate business budget cuts efficiently, get in touch with us at Keystone Executive Coaching. We have specially designed programs aimed at training business professionals to help them improve different business functions. Be it marketing, employee hiring, retention, sales, finances, and more, with our business coach and training programs, you can excel at all and make informed business decisions.
