The Thrifty Manager

Your boss has just asked you to cut at least
10% from your department's budget, starting immediately.
Easier said than done, right?
As you carefully study your expenditures,
you're faced with a seemingly impossible task. How do you decide
what to cut? Where can you save the most money without hurting
team morale, or lowering people's productivity? Should you
eliminate coffee and morning doughnuts, or cut back on office
supplies? Is it worth spending a small amount of money making the
office more eco-friendly, to help you save later on?
Most organizations have to cut costs at some
point. In today's economic climate, it's more important than ever
for businesses to watch their budgets, and to make sure they
eliminate any unnecessary spending.
When cost-cutting is down to you, however, it
can be difficult to know where to start. Cutting the right things
at the right time is a delicate balancing act.
In this article, we look at some easy ways to
cut your budget, and offer some suggestions to get you started.
Where to Start
Once you sit down with your budget, there's a
chance you might feel overwhelmed. While your team might not need
everything that's on the list, some items – like company vehicles
or holiday parties are nice to have.
If that's the case, where do you begin?

Establish the essentials – It's important to identify the things
your department absolutely cannot live without. Every business is
different, of course, so necessary expenditures for one company
aren't always essential for another.
Identify the 'luxuries' – Once you create the list of things you
can't live without, look at what's left. Some of these are
probably luxury items; expenses that aren't absolutely necessary,
and could easily be cut – for example, fresh flowers in the
reception area.

Review your 'maybe' items – These are the things you're not so
sure about. When you look at these less obvious expenditures,
assess the costs against the tangible and intangible benefits of
these items.
A good example might be your department's networking parties.
They're fun, but you might at first think that you could cut them.
However, when you socialize with valuable contacts during these
events, they often lead to referrals and sales. You'll therefore
have to judge whether these parties are a necessity or a luxury.
If you expect to gain more in sales than you spend, then it may be
worth keeping parties in the budget.
Another example could be office supplies. For instance, your team
might use large amounts of paper. Perhaps your company buys
top-quality, expensive paper, but is this necessary? Of course,
you use these items to do your work, but you could save by buying
a more economical brand of paper.

Practical Budget Advice
Cutting costs is never easy, but here are some practical tips you
can apply when trimming your budget:

Make your office more eco-friendly – This is often a great way
to save money. Even small things, like switching regular light
bulbs to energy-saving bulbs, can dramatically reduce your energy
costs. It's a small investment up front, but the savings may last
for years. You can also ask your team to turn off their computers
at the end of the day to help make further savings on energy
costs.
Use less costly supplies – Cutting your team's morning coffee
might cause some bad feelings. Instead, why not use ceramic mugs,
and stop paying for paper cups that get thrown away? If you
currently buy an expensive brand of coffee, switch to one that's
more economical.
Cross-train your staff – Many companies hire temporary workers
when regular staff are sick or on vacation. But, if several
members of your team are cross-trained – where they learn the
skills of a job function different to their own – perhaps they can
cover those duties, in short shifts, in addition to their regular
workload.
Negotiate with your suppliers – You may be able to secure
discounts for early payment, or large-quantity purchases of items
that your team uses regularly. Explore special deals to see where
you can save.
Buy less expensive equipment and vehicles – If you're about to
replace your car or truck fleet, consider purchasing less costly
and more fuel-efficient models. The same goes for office
equipment: used printers and fax machines are often available for
a fraction of what you'd pay for new ones. Also, consider sharing
these resources, and costs, with another department within your
organization.
Investigate videoconferencing – If your team travels a lot for
meetings, explore the costs of setting up videoconferencing
instead. This can help you save on travel costs.
Make telephone calls over the Internet – Software such as Skype
allows you to make and receive telephone calls on the Internet.
As long as the person you're calling has Skype too, these calls are free. This can therefore help you to save on telephone costs.
Cut back on magazine subscriptions – Your office or department
might subscribe to industry or trade journals. These can be
valuable resources for keeping your team up to date on trends and
best practice, but make sure you carefully evaluate the costs
against the rewards. Several team members may be able to share one
subscription, and many publications offer digital versions for a
reduced price.
Get bids on all of your services – You might be surprised at how
much you can save by shopping around for the best prices on
everything from shipping to office supplies.
Focus on efficiency – For instance, if several of your team
members spend valuable time every week or month writing a report,
determine whether this is really necessary. Could they spend that
time on something that's more valuable? Does another team in
another department create a similar report, and could you combine
efforts to save time? Another benefit here is that if your team
members are working more efficiently, you may be able to cut back
on overtime payments.

Communicate with Your Team
If you're forced to start making cutbacks, tell your team what's
going on. While no one wants to feel like they're with a company
that's having financial problems, they probably don't want
information kept from them. As far as you can, let your staff know
what's happening, and why.

It's also important to realize that your team members are a valuable
resource. They could have some really creative ideas for ways to
cut costs. After all, they're the ones out there working every
day. They might know of practices or expenditures that could
easily be cut for the entire company - and you could ask them to
come up with their own suggestions.
And, ask your team to examine where they might cut costs in their
own daily routines. This could help empower them, and make them
feel involved – even in a small way – in the decision-making
process.

Key Points
Many people immediately think of layoffs when they hear about
corporate cost-cutting. But, your people are your most valuable
assets. Aim to cut costs in supplies and business systems before
you reduce your staff. Focus on making your department more
efficient and eco-friendly. Even small things, like changing light
bulbs and turning off computers at night, can help reduce your
energy costs.