For entrepreneurs, reducing cost is about more than saving pocket change. It is essential to survival.
If you are in the industry, you already know just how easy it is to spend hours paging through bestseller books and scrolling through online tutorials, trying to uncover the secret to creating a lean business model that cuts costs by reducing wasteful spending and increasing efficiency.
The true key to eliminating expenditures? It might be right in front of you.
Start with your hidden assets
Your employees bring your vision to reality. Consider this: You have already invested time and money into your personnel through hiring and training, not to mention the many hours of supervision and interaction since their first day on the job. Make the most of this investment.
If you want to cut costs, get them to help you. Ready to begin? As the leader of your company, there are multiple routes towards achieving your cost-reduction goals. You can force your employees to comply, instating strict rules and imposing tough benchmarks. Or, rather, maintain the respect of your team and nurture long-term change by creating and harnessing powerful buy-in from these crucial players.
Tip #1. Tell the truth and nothing but the truth
To eliminate waste, you will need to make changes. Change may be essential to an organization’s survival, but that does not mean it is easy. Change can be particularly difficult for the employees tasked with carrying it out. This is where buy-in becomes essential.
Step one to boosting your employees’ buy-in is clear communication. Articulate exactly why you feel the reduction in expenses is necessary. Clarify that any incoming changes are to better the company, not to criticize old methods or to threaten jobs. Employ your skills as a visionary to paint a clear picture of where these changes will ultimately take you and your team.
Tip #2. Track expenditure data and share it
Examine which areas of your company have high levels of waste. The gap time between smaller steps in a larger process is often one of the greatest detriments to the larger system’s productivity. Depending on your industry, other areas to watch include inventory, supplies, production and transportation.
Create reports to track and share the specific information you uncover and are looking to improve. These visuals will help further flesh-out your organization’s cost-reduction goals. They may also come in handy if you meet resistance from team members during implementation: A simple summary report could be the facts-based backup you need to soothe an unsettled employee. Don’t assume they understand the information as well as you do, but spend time training them how to interpret results.
Tip #3. Define their roles
Now that you have clear, data-driven goals, it is time to determine who will play what role to improve performance in the specified areas. Employees need to understand the exact role they have in reducing costs for the company before they will feel buy-in.
Every team member has unique skills and talents to contribute. How will you engage them? While it is important that you facilitate the conversation, take note that your employees may have the best understanding of what they are able to achieve within their department to reach the new requirements.
Tip #4. Accountability is key
Buy-in occurs when team members feel accountable. Create a culture of accountability with regularly-scheduled meetings designated specifically for checking-in on your shared cost-reduction goals.
Before adjourning, ask team members to write down personal immediate tasks that want to complete and report on at the next gathering. These tasks should ultimately push the entire team towards the greater mission. Add an element of fun and creativity to your project: As departments or one unit, design a progress board to hang in your workspace. Track your improvements as a team or race one another to the quarterly finish line.
Tip #5. Provide the right tools
What do your employees need to reduce wasted time, resources and materials? It is never too late to ask. Here is an easy way to start: Integrate a communication platform that allows team members to easily communicate with you and each other, fluidly sharing ideas or requesting information, as needed.
Online messaging and project management platforms, such as Slack or Flow, are popular across industries. Additionally, consider conferences or training programs designed to boost your employees’ skills. These career-building opportunities are enticing to employees and only better your company in the long run.
Tip #6. Be open to ‘changing the change’
Entrepreneurs know better than anyone that success takes trial and error. Still, you can never hear it enough: It is okay to fail. Unexpected turns as you go may result in you or your team discovering even smarter ways to eliminate waste.
To preserve buy-in, do not procrastinate. Jump to it with a positive attitude, recalculating next steps and welcoming productive feedback along the way. Your grace, humility and adaptability will speak volumes to those you manage.
Tip #7. Celebrate progress
Baby steps are still steps. Even the toughest leaders with the most driven organizations know that if you do not celebrate small victories, team members will burnout. Break down goals into manageable bites, and celebrate when milestones are reached.
Even small gestures, like recognition at your next staff meeting or surprise mid-morning coffee can enhance morale and boost momentum. Maintain the buy-in you have worked so hard to gain and, in addition to saving money, you will discover a team that is eager to follow your lead.
This article has been edited.
Bob Shoyhet is a Chief Financial Officer who’s been working with companies ranging from $0 to $100M+ for over 25 years. His expertise is focused on profit maximization, which puts him in a unique position of understanding what businesses should do to get off the ground, and how to position themselves to achieve next level growth. He currently works at Melillo Consulting, an IT Solutions provider serving Fortune 1000 companies. Connect with @bobshoyhet on Twitter.
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