When times are tough you have to look at how you can Cut Costs to maximise profit. It feels like you need to pull the belt in and cut expenditure to its bare bones in order to maximise profits. But is that the most sensible approach?
It is common for businesses to cut back first on marketing. Cutting back on marketing can be sensible if your marketing activity is not bringing in any business, but if it is generating income for you shouldn’t you be increasing your spend? For example, if by spending £500 you will generate £5,000 in income or more, then that isn’t that money wisely spent – and perhaps you should be spending even more.
If your marketing isn’t generating the business you would like, before you drastically cut the costs ask yourself these questions
- Am I going about my marketing in the right way?
- Am I using the right media to engage with my customers?
- Am I sending out the right message?
- Do I stand out from the crowd
- Do customers understand why I better than my competitors?
If you don’t address these, then you have a bigger problem. And it doesn’t matter how many costs you cut, you won’t become more profitable.
So where you should cut costs and where you should spend?
As all the leading business strategists will tell you when times are tough it is important to cut back on operating costs (so long as they don’t compromise your service), but you should maintain (if you are already spending sufficiently in this area) or increase your spend on anything strategic that will help you protect and build your business for the future.
So when times are tough ask yourself “Am I cutting costs, or am I spending wisely?”