Ep 416 | It's Time for an End of Year Cost Cutting Party

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. As business owners, as entrepreneurs, especially as we're nearing year-end and we start getting into, uh, the time of year for many businesses where things actually get a bit leaner maybe seasonality of your business. But as things get a little leaner, uh, with respect to maybe revenue creation, it is a great time to evaluate your business's expense load. Not only is it great to analyze the expense— the expenses of your business, it's also a great time to analyze your personal expenses and what it is you in fact need for your life and your world and your family, and what it is that you could potentially cut, save a few dollars, create a bit more surplus. Again, as we go into the end of the year and beginning of the year, this is probably an exercise— what we're going to go through— this exercise is good throughout the year, of course, but I'm emphasizing it here today because we're in the fourth quarter and it usually is a bit more valuable at this time. So what I want to chat around is how you can run what I would call a cost-cutting party. How to run it in your personal world and how to run it in, in your business world. I mean, this is a business exercise, but like so much that we talk about here at No Days Off, there's value in doing these exact same things in your personal world. So let's talk about this idea of running a cost-cutting party. I want to give you tactical steps today as to how to go about doing this. First, I think we have to kind of assess where we stand right now. What is your business's present reality as it pertains to its expenses? Are your expenses on par with budget? Where are you maybe overspending? What are you maybe paying for that you may no longer need? How do you feel about the return you're getting on each of these expenses? Are you getting an ROI, a return on investment? Maybe lastly, good question, who's involved in expense management and in the expense reduction efforts? So what's your business's present reality around, around its expenses? Now on a personal level, I'd ask the same exact question. What is your current reality as it pertains to your expenses? Are you spending more than you'd like, less than you'd like? Are you right on? If you're overspending, where do you see that showing up? What's the theme? What are you maybe wasting money on? What do you have that might be fun or even useful, but maybe you could do without? Are you really using the items or the, the services that you're paying for? You're getting a return on that expenditure. Let's level set. That's step 1. So where you at in your business? Where you at in your personal? What's your present reality? Once we know our present reality, I wanna ask, what's the goal? Like, let's talk business. What's your business expense goal? What's the budget? Where are you trying to get? How are you trying to lower it? Again, where are you overspending? So how would you like to adjust that? What are the real, you know, opportunities here for improvement? And how much expense in your business would you need to reduce in the next, say, month for you to feel like you won, like your efforts were worthwhile? And on the personal side of things, what's your personal expense goal? Where would you like to see it be? If you have a number, Like, hey, I'm spending X, maybe it's X minus 10% or X minus $500, whatever it may be on a monthly basis. Where are the opportunities and how much would you like to reduce in, say, the next month? So, now we've got our present reality, where do we sit, and we've gotten clarity around where we want to go, both in business and in personal. Now, we get to run the actual party itself. Here's what I would do in my business. Here's the initial steps. Step 1, I want you to gather your leadership team or whoever else that you think might be participating in this exercise and explain the goal of this cost-cutting party. And the goal is something probably along the lines of to reduce expenses by X dollars or by Y percent. After you've gathered the team and explain the goals, now I want you to, number 2, explain the benefits to reducing expenses. In most businesses, when you reduce expenses, it creates more profit. And when you create more profit, it usually means there's opportunity for greater investment in the business. And when that happens, more opportunities are generated for all. So, explain the benefits of reducing expenses. Number 3, pick a date. Pick a date for the party, pick a venue for the party. Maybe the date's a few weeks away. The venue, maybe it's your office or maybe it's a coffee shop. And then lastly, number 4, gather the data you'll need for the party. Pull your financial statements, pull your expense reports, any other documents that show you where your money's going, and make sure that you're familiar with these documents before you hand them out to members of the cost-cutting party. That's the business steps. On the personal level, it's not a heck of a lot different. Number 1, I said gather your leadership team on the business side. Gather your significant other, gather your family if they're of age, or maybe if they're not even— maybe if they're kids and you want them to learn, bring them into this conversation and explain the goal of this exercise: to reduce expenses by X dollars or Y percent. Talk to the— talk to the family about the benefits of reducing expenses. Why we're going to save money. What's the opportunity there? Is it to, to do, to save up for something bigger? Is it to invest and create wealth? Explain the benefits. Number 3, just like we did with business, pick a date, pick a venue for the party, and it could be anywhere. Maybe it's at the kitchen table, maybe it's out at a restaurant. And then lastly, gather all your personal detail. Gather your bank statements, gather your bills, gather anything that's showing money moving around, and get familiar with that information. So now we've taken the initial steps to running the cost-cutting party. Here's what we do on the day of the event. For business, I want you to break into small groups. If you only have a few people, maybe it's just break out individually. And then I want you to assign each individual or each group a specific area of expenses to analyze. For example, maybe Group 1 has office supplies, and Group 2 is looking at utilities, and Group 3 is looking at marketing, Group, you know, 4 is looking at travel, then back to Group 1, they're looking at the training or salaries, whatever it may be. Just choose, uh, uh, specific areas to hand over to each respective group. Once the group has their assigned set of expenses to analyze, Here's what I want you to have them do. Ask each group to categorize all the expenses that they're now reviewing. I want to, I want to use the following 4 categories: A, B, C, D. A, put an A next to everything mandatory in your business. If you're selling real estate, this would be your, your dues or your continuing education or your MLS fees. That's mandatory. You can't sell real estate without that. B, I want you to categorize things as B if they're necessary expenses. In business, this may be your rent, this may be your cell phone. These things are necessary, not absolutely mandatory, but pretty darn important with respect to the business and its operation. C, I want you to categorize, uh, those expenses that we call useful as category C, useful expenses. This would be certain marketing collateral. This would be the glossy postcards over the matte, the matte finish. This would be those other things in your business that are nice to have, but, and useful, but certainly not mandatory, probably not necessary. And then category D, the final category, these are the optional expenses. These are the things that oftentimes you did not even realize you're paying for them. Until you went through this review exercise. So, I want you to categorize A, B, C, D, mandatory, necessary, useful, and optional. Lastly, on the day of the event, once everything's categorized and once this analysis has been done, each group is then gonna share their suggestions based on what they found. And the team, the group, the collective group will make a decision and reach consensus around what to do. Again, remember, if you set a goal to set to, to kill a certain amount of expenses, you're probably going to start at your optionals, slice them out right away, move to your usefuls, and cut a portion if not all of those. Does that get you to your goal? If not, we may have to move into the necessary expenses and ask questions like, what would we do if we cut this? On the personal level, same sort of thing, except you may not have to break into small groups here. I want you to go through your personal expenses and categorize things as mandatory, necessary, useful, and optional. And then based on the goals that you set, ask yourself, ask the family, what do we want to cut? What optional expenses do we want to cut to achieve our goal? And when we achieve our goal, here are the benefits. Makes sense. So, the conclusion here of this whole exercise? What are the final steps? Number 1, develop an action plan to putting all of the agreed-upon measures into place, right? So if you, if you come away from this, this cost-cutting party day and say, okay, we're going to cut these 7 expense line items, what's the action steps to making that a reality? Who's making the call? What's the act of canceling? By what date? So number 1, develop an action plan. Number 2, implement and monitor the cost-saving measures. In other words, make the adjustment and maintain the adjustment. Also track what sort of impact, if any, this has had, good and bad. And then lastly, number 3, celebrate. Celebrate the successes that you've had. As you watch these savings create more opportunity in your business, recognize it, talk about it, and celebrate it. Maybe, maybe even reward those individuals that helped you in cutting costs down. On the personal side, same sort of thing. Make sure you have an action plan. Make sure you monitor and celebrate the wins. So in summary, the cost-cutting party is an idea, something to create more energy and excitement around the reduction of costs, especially as we get into some of the leaner months of the year, both professionally and personally. I believe that if you take action, cut some expense, and run a tighter, leaner business, it makes you a better entrepreneur, a better business person. We should always be operating as if we're in a leaner month versus a, I guess I'd say, robust month. In other words, how do you think about your expenses when your revenue is really high? Now, how do you make— think about your expenses when your revenue's lower than usual? I would encourage you to make low-revenue-month decisions and always operate that way. That's all I have for you today, the No Days Off podcast. Thank you so much for listening. And remember, every single day brings new opportunity to get better. So let's get after it.