As I See It: Five ways to cut costs and improve business performance

By Guy Fardone, COO, Evolve IP
Main Line Suburban Life, July 15th, 2009

The end of Q4 2008 saw the U.S. economy drop a staggering 6.4 percent, with similar declines coming in the first quarter of this year. Businesses across the U.S., including here on the Main Line, are now challenged to stay afloat during these turbulent times.

While cost-cutting is certainly the most realistic solution for most businesses today, layoffs and other drastic scalebacks are not the only ways to cut expenses.

Here are some simple ways that Main Line businesses, no matter how large or small, can conserve capital, gain more flexibility and boost productivity during the downturn.

GET CREATIVE WITH PAYROLL. Sometimes layoffs may be the only option. However, in many situations, other opportunities do exist. The truth is, you might be able to save the same amount or more without laying off a single individual. Alternative options include bonus eliminations, plan restructuring or payout deferment. In the case of a restructure or deferment, goals can be tied to revenue, margin or cash flow, and adjusted to drive conduct necessary to meet critical company financial targets at some point in time. Another option is a partial payroll reduction across the board, but to offer an incentive that could more than pay for itself if the company hits targets.

USE YOUR SOCIAL NETWORK AND WORK TOGETHER. Everybody is looking to cut costs, but your need for certain goods and services will remain regardless. Try contacting partners, suppliers and associations to see if they’re willing to barter for goods and services. It’s likely another company needs your product/service as much as you need theirs, and would be open to arranging a trade. If bartering isn’t an option, talk to vendors, partners or associations about a price reduction for higher volume or new partner introductions, or to simply reduce costs to help keep your business healthy.

HEAD FOR THE CLOUD. Are you in need of new technology but hesitant to make a capital expenditure in these tough times? If so, look to the cloud for options that can be taken off site and virtualized. For example, if your data network or phone systems are ready to be replaced, consider switching to Voice over IP (VoIP) or CaaS (Communications as a Service). Outsourcing technology and virtualizing applications can help your organization do things faster and cheaper. Your technical staff will regain valuable time by eliminating time spent on mundane tasks, and instead can concentrate on more strategic things like revenue generation and cost reduction. In addition, virtualized solutions can provide productivity and mobility-enhancing features such as unified messaging (i.e., voicemail delivered to your e-mail inbox), which allow your employees to get more done, from any location. Hosted technologies can also help cut your power, cooling and real-estate footprint bills; help you go green and increase your application security, scalability and stability.

CONSOLIDATE VENDORS. Many businesses work with a handful of different providers to obtain services like phone, Internet, applications and security. Think about how much valuable time is spent coordinating with these different companies — time that could be spent servicing customers or focusing on the core competencies of the business. Find a single vendor that can implement, manage and maintain all your communication technologies. This will save you time, minimize vendor logistics and reduce the personnel costs associated with managing these different relationships. Packaged services are also likely to cost you less than purchasing them à la carte.

COMMUNICATE, COMMUNICATE, COMMUNICATE. Whatever you do to achieve critical cost reductions, remember that the most important thing is effective communication. Effective means taking the time to explain the whats, whys and hows to as many people as possible, and what these changes mean to them and the company as a whole. Conduct focus groups and/or one-on-ones with your employees to gain critical feedback and ideas in a time of need, and bolster effective communication and team-building. The more bought in they are to the mission, the better they will accept and internalize it and ultimately perform.

There’s no denying the economy is suffering, and businesses around the globe are feeling the pinch. I’ve been a Main Line business partner for a long time, and can say that while it’s a great place to start and run a company, we aren’t immune to a down economy’s effects.

No one can say for sure when relief from this downturn will come, but by working together, and making smart, simple changes to your operations and the way you use technology, we can weather this storm as a community and maintain the Main Line’s strength as a hub for local, national and international businesses.

Guy Fardone is a Villanova University graduate and has spent his entire professional life working on and around the Main Line. He is the chief operating officer and general manager of Wayne-based Evolve IP, a managed technology service provider that offers businesses a suite of services that includes managed telephony, hosted applications, managed networks and information security and compliance. For more information visit www.EvolveIP.net.

Read the full article online here at Main Line Suburban Life: As I See It: Five ways to cut costs and improve business performance