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Tightening Our Belts - No, Not Those Belts, Our Financial Belts

During the slow economy, most of us have had to tighten up our budgetary expenses both personally and professionally. We’ve all heard and read stories about businesses drastically reducing services or having to close their doors. We may know somebody who has personally foreclosed on a home or who has declared bankruptcy. Of course, some businesses are absolutely thriving in this economy. I don’t have the magic bullet that can help us all be successful, but I do have a couple stories I’d like to share:

Non-Profit Cost Cutting

A few weeks ago I read an inspiring short article about how a program serving the homeless and less fortunate in the city of Detroit had cut their expenses by 40% from the previous year without cutting back on any of the services they provide. 40% reduction, when they are seeing an increase in quantity of customers—that is outstanding! The Open Door program has been serving Detroit’s homeless and less-fortunate for 35 years. They feed over 400 people every Thursday and also offer clothing, showers, haircuts, medical services, etc… In order to continue the services they provide, it was imperative they find ways to cut their costs. They not only involved the full-time staff; they included their part-time staff and volunteers in their cost-cutting efforts. Some of their cost-cutting efforts included: reducing cost by finding suppliers with better prices and better utilization of volunteer and staff talent in terms of service delivery.

The inspiring piece of this is two-fold. One, with this 40% reduction, they are still paying their part-time staff the same rate and they are still providing the same quantity and quality of services and care they have always provided. Secondly, it’s had a positive impact on guests, staff, and volunteers. Ben Ogden, Director of the Open Door, says, “While it certainly hasn’t been easy, what it has done is reaffirmed our belief in a better way, not only for our guests, but for ourselves as well.”

While there are several lessons to take away, I’ll just share two here:

* It is possible to reduce expenses without impacting quality of services.
* It’s imperative to include your staff (full-time/part-time) and your volunteers in your planning — they just might surprise you with some of their ideas!

Business Cost Cutting

In a slow economy, cost-cutting should not be a tactical decision; it must be a strategic decision! Reactive cost-cutting will only get you so far. An acquaintance of mine who owns a small, yet prestigious clothing boutique is having the best year she has had in the past 5 years. How is that possible? Sure, she reduced expenses; she also asked herself some questions that made her change the strategic direction of her business. Those questions:

* Do my customers/clients think about my product differently now that the economy is slow?
* Has my relationship with any of my suppliers changed?
* What is my competition doing?
* Do I have the right mix of staff/talent, technology, and facilities?

Her answers to those questions helped her make some decisions. She spoke with some long-time customers that had stopped coming into her shop to ask them what she could do to keep them coming in. She found out that while they loved her high-end clothing, they felt it was too frivolous during the financial crunch. So she modified her offerings to include some less pricey items. She had a great relationship with her suppliers, so she leveraged that relationship to forge additional relationships with a wider variety of suppliers. She had to reduce the size of her staff and reduce the size of her displays, and she was still paying rent on a full facility that she wasn’t using. She renegotiated her lease terms and space. She found out that with her change in product mix, that she actually has MORE competition than she did before, so she effectively revamped her marketing techniques.

When I asked her where her business would be when the economy turns around, she said, “Right where it is supposed to be; making a profit and keeping my customers happily clothed.”

Personal Belt Tightening

I overheard a conversation the other day between two middle-aged women. Both had recently been laid off from their careers. Betsy talked about cost-cutting and how her family just didn’t get that they lacked finances. The other lady, Kate talked about how this was an opportunity for growth instead of focusing on what they didn’t have. While Betsy spoke about how much time she wastes watching tv and playing on her computer; Kate spoke about how she is better using her resources by networking and being productive. Kate even mentioned that she started to perform at a local coffee shop one night a week for tips.

This made me think about how many people really are focused on their lack — those things they don’t have or can’t have. Kate, the woman who spoke of this being a time for opportunity, certainly has a positive attitude! She found resources that were dormant and put them into play. What can you do to focus on growth and opportunities? What talents do you have that you could start using today?

Coaches Challenge

Ask yourself the tough questions, be honest with your responses, and create right actions for yourself and/or your business!! In addition to the thoughts/questions already discussed; here are some additional thought starters:

* What’s important?
* What needs to change?
* What resources do you already have that you’re not using to the full extent you could?

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