Amid inflation, supply chain disruptions, and rising operating expenses, targeted cost-cutting measures can help companies weather the storm.
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Financial strategies and disciplined budgeting are essential for navigating the ebb and flow of the economy. Amid inflation, supply chain disruptions, and rising operating expenses, targeted cost-cutting measures can help companies weather the storm.
A new approach to budgeting. Budgeting should not be a one-time action that is responsive to the economy, instead there needs to be a holistic strategy that consistently analyzes costs, even when times are good. Having a cost-saving mindset now, can help a company be more prepared to navigate economic obstacles in the future. “Budgets are a real test of how your company thinks about costs. If yours tend to get adjusted incrementally through function-by-function agendas, you’re probably not actively – or strategically – managing them,” Vinay Couto, Paul Leinwand, and Sundar Subramanian, write in an article for the Harvard Business Review.
Embrace remote work. Originally adopted out of necessity during the COVID-19 pandemic, remote and hybrid work models have since proven their value for businesses. These approaches reduce expenses on physical office space and utilities, enabling companies to save more money on brick-and-mortar locations and instead invest in overall operations. In addition to the cost savings, remote and hybrid models have been proven to boost employee productivity. In fact, a study found that employees were 24% more productive after transitioning from in-office to fully remote work, according to financial software company Brex.
Leverage AI services. The potential of AI is vast, with applications spanning business operations and budgeting. Implementing AI can reduce the need for human labor, but more importantly its ability to analyze and predict can be beneficial for constructing a comprehensive budget. Instead of manual forecasting, AI can help economic predictions, take on mundane tasks like invoicing, and streamline documentation associated with HR onboarding. “There are significant cost savings that can be delivered from leveraging technology spending. Consider the multitude of offerings that can automate previously labor-intensive processes using AI tools,” Lee Shapiro, manager partner of 7WireVentures, writes in Forbes.
