If there’s one thing NOT to do with your finances
during a crisis, it’s to make a knee-jerk reaction.
“It’s about cutting costs but not cutting costs
that will hurt your future,” BBB Northwest + Pacific Senior Vice President of
Operations Heather Tuttle says. “The decisions we make now can help us sustain
and help us survive past our current crisis.”
While you may face making difficult financial
decisions during these trying times, business owners must strike a balance
between selling the farm and planning for longevity. To do that, Tuttle
recommends three things: 1) cutting discretionary spending, 2) working with
vendors and 3) putting employees last on the list (it’s not what you think).
Tuttle says that in the 12 years she has helped
BBB with finances and planning for the future, she’s implemented all three
strategies. We talked to Tuttle about ways to trim expenses without harming
Cut Discretionary Spending
Just as families across the world are making
difficult decisions with their finances, so must businesses. Perhaps your
family is ending its favorite mail subscription and screening services. Maybe
you’re halting all the “want” purchases and transitioning into the “need”
purchases. Many businesses must do the same.
“With discretionary expenditures, look at
cancelling or postponing the non-essentials,” Tuttle advises. “Freezing
non-essential recruitment or work that isn’t essential to the day to day can
help. For BBB, we cut all nonessential travel.”
Business owners should also look at cutting what
Tuttle calls “normal perks” like office supplies and breakroom snacks (which
will likely be an easy cost savings with employees working from home). Don’t
forget to ask your employees for ideas on where to cut costs.
“Let your employees know, ‘We need everybody’s
help,’” Tuttle says. “We all need to brainstorm ways to save.”
After attacking the obvious, it’s time to get
“Go through line item by line item in your
budget,” Tuttle says. “Look for what you can cut that won’t have a long-term
After halting non-essential purchases and looking
for hidden savings in the budget, it’s time for your business to look at the
second method to cut costs.
Work with your vendors
So, your business’s discretionary spending is
down, but your financial picture still looks grim. How will you pay your
various vendors as sales dwindle?
“Talk to vendors,” Tuttle advises. “Let them know
about the situation. Let them know you are price shopping for savings. A lot of
vendors will work with you.”
Tuttle also recommends asking if a vendor will
allow you to space payments out. Say you typically pay your vendors within 30
days of receiving an invoice, ask those vendors if you can instead look at a
payment plan for 60 or 90 days. If a vendor is unwilling or unable to work with
you, it’s time to shop around. Remember to look for good deals from vendors and
try to negotiate on price.
Putting Employees Last
If you’re in an industry lucky enough to still be
operational, do whatever you can to keep your most valuable company asset: your
“Our people are our most important asset,” Tuttle
says. “For us at BBB, we try to see what we can do to have as little impact as
possible for our people. People are the last thing to go.”
With new stimulus bill money appropriated to help
businesses fund payroll, there are more options to help you
keep good people around. As this crisis progresses and eventually ends, the
last thing you want to worry about is re-hiring a dynamic crew. Keeping your
best people will help you innovate now and rebuild your business stronger than
If you absolutely must lay off your staff, connect
them to unemployment
resources and be honest about what’s happening.
“It’s really important when you’re making cost cutting decisions that you communicate effectively,” Tuttle says. “You have to be transparent across the organization. It’s important for employees to know we’re all in this together.”
For more business tips during these trying times, visit trust-bbb.org/coronavirus