Don't skimp on these 5 things when reducing costs in your business
While reducing costs and creating processes that will save your business money is a mandate that every real estate principal has tackled at some point, there are some parts of your business that may not be wise to reduce spending in.
What does running a household and running a business have in common? In most cases, they both run on a budget, and cutting expenses is an ongoing exercise. But just as there are some areas of your household you wouldn't think of cutting expenses, there are also some areas of your business that require a little more consideration before deciding to reduce costs. These are some of the areas that small business owners may want to think twice before cutting costs in.
1. Technology Safety Measures
As a real estate business, you probably have some form of digital presence including the storage of valuable customer data. As a result, IT security should be one of your top priorities, and an area that may not be wise to cut costs in. Cybercrime continues to become more and more sophisticated every day and downgrading your security levels makes you more susceptible to falling victim to an attack. The consequences of suffering a cyberattack can be costly, and few small businesses can make it through without their financial health being thrown into jeopardy.
In addition to IT security software, it's also worth considering Cyber Insurance for your real estate agency to help cover the financial losses you may suffer if you were to experience a cyberattack.
2. Insurance for Your Business
When it comes to insuring your real estate agency, there are a lot of options to choose from, and comparison websites can make it very appealing to go with the cheapest option. But in this instance, the cheapest policy may not always offer the best cover. While it's reasonable to shop around between different providers and brokers to make sure you're getting the best deal overall, it's also important to carefully review the cover you're receiving under each policy to ensure it suits your needs. Choosing a broker who has a thorough understanding is also a good idea.
3. Your Product/Service Quality
Cutting costs in areas that directly impact the quality of your service may save you money in the short term, but in the longer term, the resulting lost customers and damage to reputation may be even more difficult to repair. According to Cameron Woodcroft from Pilot Partners, "Reducing costs in areas of your business that drive income and growth may reduce potential revenue, and this is 'a big no-no.' You should also think twice about reducing investment into areas of your business that you expect will generate future growth for your business. If it's absolutely necessary to make this investment, think about just pausing these expenses as a temporary measure."
While it's inevitable that at some stage you may need to look at your staffing levels, it's also important not to make this your default option every time business starts to slow down. Providing employees with job security will benefit your business with improved morale and productivity. However, if you find yourself needing to reduce staff costs, consider other ways such as reducing hours, enforcing annual leave or even temporarily reducing salaries. Just remember to get advice from a qualified employment lawyer prior to taking any of these steps to ensure you're making all the right moves legally. Another area to avoid trying to save costs is when hiring an employee - how your business thrives will depend greatly on the calibre of your people, so when hiring a new staff member, try not to hire a candidate willing to accept the lowest salary. Instead, choose a candidate who you feel is genuinely right for the role.
5. Marketing that Works
Marketing budgets are often another area that get cut when a business's financial performance starts to suffer. While you may need to reduce costs on your overall marketing, it's important not to reduce spend entirely on areas that have been proven to bring you results. For example, if you've been advertising on multiple social media platforms, consider running your advertising on one channel that has proven the most effective.
Disclaimer: Aon has taken care in the production of this document and the information contained in it has been obtained from sources that Aon believes to be reliable. Aon does not make any representation as to the accuracy of the information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. To view the original article, please click here.
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