Growth

Business is booming. That's the perfect time to cut costs

Jeff Haden
Business Journalist

Jeff Haden is a bestselling ghostwriter, speaker, Inc. Magazine contributing editor, and LinkedIn Influencer

Jeff Haden
Business Journalist

Jeff Haden is a bestselling ghostwriter, speaker, Inc. Magazine contributing editor, and LinkedIn Influencer

As the silly season approaches, Jeff Haden looks at why cutting costs is important, and why peak periods aren’t just business as usual.

The holidays are coming… and if your business is retail, or hospitality, or wholesale, or logistics, or a whole host of other industries – that also means your busy period is coming.

And with the increased activity comes increased cost. Or then again, maybe not.

Most cyclical businesses depend on their boom seasons to “make” the year, generating revenue multiples that offset traditionally slower periods. In retail, Christmas is often the make or break period of every fiscal year.

That means maximising revenue is important, but so is controlling costs – every dollar spent offsets a dollar earned.

That’s why managing costs during the upcoming holiday season is critically important. Here are some mindsets you could adopt to help make boom-times a little easier.

a person typing on a laptop surrounded by christmas objects

Don’t think business as usual

An easy trap to fall into, especially where employees are concerned, is to assume that increased activity must automatically result in increased staffing. For example, if an employee normally handles 100 customer transactions a day and volume doubles, you assume you need two employees to handle the increase.

The key is to approach activity not from a baseline established during slow periods but from the perspective of what is possible.

The employee handling 100 transactions a day during slow periods may not be working at their peak all of the time. They’re likely able to handle a lot more transactions – the key is to know how many more and manage to that number.

When I worked in manufacturing, our business was highly seasonal.

We made sure employees knew that when volume picked up, so would our expectations for performance. To use a farming expression, we needed to make hay while the sun was shining.

Make sure your employees know your expectations, and it’s important to have plans in place to meet both long-term and short-term business goals.

Importantly, take the time to explain the financial impact the busy period has on your business and how controlling costs could mean the difference between a profitable year and a disastrous year.

Don’t throw money at your problems

More activity also results in more stress. When you’re overworked and overwhelmed and feel like you need to make a new critical decision every five minutes, it’s easy to use money to solve a problem.

Wholesaler delivering late? The easy answer is to work overtime. Backlog in shipping? The easy answer is to switch from ground to second-day delivery.

Every successful small business owner I know is incredibly creative, especially in the face of challenges. Always look for a creative answer before you throw money at a problem – you might find a more efficient technology or effective process that will extend into every period of your business cycle.

Always consolidate

When business is slow you have plenty of time: to train, to hold team meetings, to celebrate successes, to meet with vendors and suppliers. When you’re busy, you never have enough time.

But there are still things that must get done – so consolidate them. If you hold a team meeting, bring in lunch to celebrate an employee milestone at the same time. If you typically hold department meetings individually, combine them to save time and open up the possibility for shared ideas.

Don’t think in terms of doing less, especially if a task or activity is truly important (and if it isn’t truly important, why are you doing it in the first place?)

Think in terms of doing more by combining tasks and activities. You’ll be surprised by the opportunities you’ll discover when you let the constraints of a busy period spark your creativity and ingenuity.

Holiday periods can be expensive for any business.

Now is the time to read about the 5 apps your business needs this holiday season. 

Find Out More

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