A Process to Cut Costs

Cutting costs during crisis mode is necessary but it also requires a plan. Here's a process that is difficult but healthy to walk through when times are tough.

Step 1. The Dump

If you don't have all your ongoing business expenditures organized somewhere, do it now (should have been done years ago). These are the costs that you spend each month no matter what. Electricity, web hosting, services...etc. If you do have them organized already,  great move on to Step 2.

Step 2. Priorities

Draw a chart like the one below (traditionally used for prioritizing activities or tasks, but useful here too) with four quadrants, the X-axis labeled "urgent" and the Y-axis labeled "important." Place EACH on-going expense into one of these four quadrants:  

Step 3. Cut

This is the difficult part. Identify the items that are in the not urgent, not important quadrant and consider cutting them. Chances are, these are marketing and sales items that are simply not primordial to your business survival right now. Depending on the severity of expenses you need to slash, you may need to then look into Urgent but not important.

Note: If you place the biggest expenditures on the chart first, you may come to some decisions faster. For example, if you have a large expenditure like a Branding Specialist that is not urgent or important right now, you can cut it right off the bat and save time. The deeper you go, the more nuanced your cost cutting gets.

Step 4. Think outside the matrix

There will inevitably be expenditures that you feel like you need to cut (but for whatever reason, are struggling with). Examples include office rent, long-time employees, a mortgage. Realize that the person on the other end of that money is not unaware of our dire circumstances. So taking a deep breath, having an honest conversation about your inability to pay on behalf of the future of your business, can often lead to some sort of compromise. After all, this is someone you've likely built up a strong reputation with over time.

The other option (not communicating with the individual) may bypass "creative" solutions.