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12 Methods of Cutting Costs for Business That Save Jobs

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12 Methods of Cutting Costs for Business That Save Jobs

Cutting Costs

Big business is known for being ruthless when it comes to cutting costs. There’s usually barely a discussion before making the decision to lay off employees in droves to save a business that is going South. Small businesses are the exception to this rule. Employing much more than half of the U.S. Workforce, it’s the small business that works to try and find ways to keep employees by employing other cost-saving methods to save valuable jobs. So, the question becomes how to cut costs in business?

Cutting Costs for Business Made Simple

Now, I admit my bias here. I’m a small business owner, and I have employees who work for me. I know how difficult it is when sales are down and the bills all need to be paid. That’s the reason that I’m writing this article. If it only saves one person from one small business, it’s well worth the time invested.

To anyone who has yet to sit at the table when budget cuts are necessary, it’s difficult to fully understand the costs of laying people off. When an employee walks out that door, they’re taking more than that fancy stapler you had at their desk. Employees that leave your organization to save money are taking valuable business experience and memory as well. This is one of the hardest things to replace when it comes time to rehire. Capturing the lost business memory shows up for a minimum of 6 months to a year as new hires get acclimated to the culture and systems of the business.

Big business should take a page from the small business playbook here and look for other business cost-cutting methods to retain valuable employees who are dedicated to the organization. Hiring new employees is difficult, and retaining top talent should be core to cutting costs for any business.

12 Methods for Cutting Costs

What follows is 12 methods of cutting costs that can be used in both small and big business. Before you head for the employee ax, evaluate these methods for your business.

Method #1: Evaluate Overtime Use and Regulations

It’s quite common in a lean time for business to ax staff and expects the remainder of the workforce to pick up the pieces. What is often forgotten during this time is that overtime usually soars and staff costs can increase. If you’re going to be asking your staff to embrace a heavier workload, evaluate the workload of your current staff first. If there’s no bandwidth to pick up additional areas of responsibility, overtime will increase and productivity can easily drop. Before you make any rash staff decisions, consider which areas and tasks are essential and which could be left for a time. Overtime is a costly alternative that should be used sparingly to get things back on track.

Method #2: Consider Cloud-Based Services

Tasks that used to be handled almost entirely by third-party service companies are now attainable for your workforce. Gone are the days where tasks like customer scheduling, security, and account management need to be subbed out to another company. This cost is excessive, and the resources are available to accomplish these tasks in-house. If you’re working with a third party company that does all of your billing, there are cloud-based programs that can take care of it. With minimal training, entire areas of your business can be brought back in from third-party vendors and cloud-based solutions can save you thousands of dollars.

Method #3: Allow Your Staff To Work Remotely

One of the first “hard costs” that comes into view when looking at cutting costs is building and utility use. Do you know how much it costs to work in your building each day? If you add up the utilities, rent, paper, and other office costs, how much could you save if working remotely was encouraged? We live in a world where technology can bring us together for video meetings. Documents can be shared and edited in real time. The reasons to be in the same room with each other 5 days a week are greatly diminished from days gone by. What if you kept office hours 3 days a week and allowed working offsite the other two days? I encourage you to give it a try and watch your productivity increase.

Method #4: Offer Fewer Hours To Keep Jobs

When faced with terminating employees to keep costs down, consider reducing available hours rather than a layoff. Most staff members will accept a reduction in available hours to keep their job. I’ve even personally seen staff groups collectively reduce their hours to keep a valuable member of the team on the payroll. When you can be honest with your staff and allow them to help, you may find that they have solutions you haven’t thought of yet.

Method #5: Assign New Areas Of Responsibility For Existing Staff

During slow times of business, there are inevitably certain areas of the business where workers cease to have enough to do. Consider redistributing tasks among the staff to accomplish what must be done. Offer training for staff members moving into new areas to ensure their success. You’ll find that most people are willing to learn and try new things if the opportunity arises.

Method #6: Renegotiate Your Payment Acceptance Strategy

When it comes to hard costs for your business, one that is often overlooked is your payment acceptance strategy. Many businesses sign a contract with a merchant services company and never revisit their contract. If you’re still paying a percentage to a merchant services company to accept credit and debit cards at your business, you’re working with the wrong provider. Things have come a long way in the past few years, and you’re losing way too much money to fees. How much more money would there be back in the budget if you could accept credit cards for free? It’s possible. You just have to find the right provider. Partnering with the right merchant provider can mean thousands of dollars in savings each month. Having the right payment processing solutions for your business type is vital in any cost savings strategy.

Method #7: Evaluate Annual Raises

I don’t know a single employee that enjoys delaying raises. For most employees though, when faced with layoffs or termination, a delay in a raise is expected to increase job security. Don’t just charge blindly ahead with the ways that things have been handled in the past. Look at what has been done and evaluate if it is still appropriate for the business. Depending on the financial climate, raises and other benefit increases may need to be delayed, and that’s okay.

Method #8: Look Over The Bonus Structure

For any of us who lived through the housing crisis and ensuing recession of 2007, we know bonuses can get people into a lot of trouble. Seeing the executives of the major lenders take a bailout from the Government and then give themselves Million dollar bonuses is a jerk move. Don’t let this be you and your company. When faced with a downtime in your company, bonuses may need to be delayed or tapered to save the company. Take the temperature of the company before any bonuses are awarded. Employee morale and general good will can be adversely affected if things are handled poorly.

Method #9: Increase Staff Rewards and Incentives

Morale plays a big part in how a business rides through a down time in the business. The simple act of buying lunch for the office can go a long way to keeping morale high. If you’re asking workers to reduce their hours or take a pay decrease, what benefits could you add to go along with it? Could you increase available out of office time? What if you created a new bonus structure that wasn’t based on financial incentives, but rather tangible incentives? I’ve watched entire offices fight over something as simple as a new piece of technology that was just released. For the low price of $600, the productivity of the staff went through the roof to compete for the prize. What could be that carrot you dangle in front of your staff to increase the incentive for your workforce?

Method #10: Renegotiate Health Care Benefits

If your business offers health insurance, think about renegotiating your plan to save on cost. Increase to higher deductibles and raise the co-pay amount if necessary. If required, reduce the company portion paid per employee. Most of the people working for your company would rather pay a few hundred more dollars in health insurance and keep their jobs.

Method #11: Embrace Lean Methodologies

The employees of your company have ideas where waste is running rampant. There’s nobody better to ask where money is going to waste than the people on the front lines of your organization. People will bend over backward to support your company and your leadership if they know that you are doing all that you can to save jobs. Listen to the people under your leadership. Ask for their ideas. Cut out the waste and the convenience purchases that are running rampant in every company. Show your team that you’re all in to do everything you can to save their jobs.

Method #12: Growth Hack Your Marketing

If you’re working with an ad agency, are they paying off? If you’re in a downtime in your business, one of the first places you need to look is marketing. Remember that a great marketing agency will return much more in revenue than they are paid. If your marketing team is only bringing in enough to pay their fee, find another team or do it yourself. There are so many freelancers who can help you with various parts of your marketing. From SEO to Pay Per Click, software services abound with no shortage of freelancers who can help your growth hack your way to the top. If you’re looking for a place to start, maybe for a strategy and consulting session with a marketing agency to evaluate what’s working and what needs the ax.

Cutting Costs: There is a Solution

If you’re experiencing a downtime in your business, know that you’re in good company. There are Fortune 500 companies that are in the same boat you are right now, and you both have the opportunity to turn it around. Before you think about laying waste to employees, walk through the strategies above and do all you can to prove to your employees that you’re serious about keeping them around by cutting costs in different areas of the business. If you’re willing to put in the hard work to reduce waste and employ new methods of cost savings, you will be rewarded.

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Example of High Risk Merchants

  • 1-900 Phone companies – If you’re the type of company that charges people to have a chat on the phone, you’ll be considered high risk.
  • Adult Bookstores – Clearly a part of the adult entertainment industry, and an easy mark for the high risk tag.
  • Adult Entertainment – Any business labeled with the “adult” descriptor will automatically be assigned a high risk status.
  • Adult Toys – As “adult” is in the name, it’s an easy target for association with the adult entertainment market.
  • Airline Industry – Due to cancellations on high ticket purchases, this will put your airline company in the high risk category
  • Amazon Stores – By having a high rate of return, Amazon stores are seen as high risk.
  • Ammo Sales – Association with the weapons industry guarantees high risk status.
  • Annual Contracts – Any time an annual contract is involved it can be considered highrisk because most consumers forget they signed up and chance of chargeback can be high.
  • Antiques – With a high average ticket per item, antiques are considered a risky merchant type.
  • Astrology – The study of the celestial bodies and the influence on human affairs can be a chargeback target if customers feel like they aren’t getting the answers they want.
  • Auctions – Because of the nature of bidding on a product and not having a set price the risk level goes up.
  • Autographed Collectables – There is almost always a question as to whether an autograph is authentic, and therefore chargebacks are much higher in this industry.
  • Automotive Brokers – Brokers of automobiles have a very high average ticket are are therefore of higher risk.
  • Bankruptcy Attorneys – Since the people who are working with bankruptcy attorneys are usually in financial trouble, the odds that a payment would be charged back is higher.
  • Betting Services – In many states betting is illegal but for the legal states betting with a credit card has huge chargeback implications.
  • Brokering – When a third party is involved with selling a product the risk level goes up ten fold.
  • Business Loans (Merchant Cash Advances) – Loaning money is always risky, but with business loans and startup lending, high risk is present by the nature of the business.
  • Casino – Just like a betting service, if a customer gambles with their credit card the chargeback rate sky rockets.
  • CBD Products – CBD itself poses high chargebacks because of the legitimacy of the product and the health benefits promised.
  • CBD E commerce – CBD E Commerce has twice the charge back of retail CBD because many consumers don’t feel like the product they receive gives them the benefits promised.
  • Check Cashing (Check Processing) – The level of fraud in check cashing and cash advances is what gives this industry a higher risk consideration.
  • Cigarettes – With higher levels of risk for theft and criminal activity, cigarette sales are deemed high risk.
  • Collection Agencies (Collection Agency) – Many banks see collections as an unsustainable business model that is many times unreliable.
  • Collectible Coins – A higher level of chargeback in this industry gives it a high risk tag.
  • Collectible Currency – Due to the level of inauthentic collectibles, the risk of chargebacks are much higher with collectibles.
  • Copyrighted eBooks – When someone sells something copyrighted without permission many legal issues can arise.
  • Coupon Programs – With many coupon programs the coupons expire and once they expire the consumer wants the money back they spend.
  • Credit Counseling – Due to their clients usually being in financial problems, this industry is fraught with non-payment and fraud.
  • Credit Protection – Most people that need credit protection are bad with money so chargebacks abound.
  • Credit Repair – If a consumer needs credit repair then chances are they are a high risk for chargebacks.
  • Currency Sales – Many businesses that exchange currency do it at incorrect rates hence more chargebacks.
  • Dating Services – Dating is a volatile industry, and is also lumped in with the adult entertainment industry, making it a high risk account.
  • Debt Collection Services – As the collection of debt isn’t always possible, this industry retains the tag of risky.
  • Debt Consolidation Services (Debt Consolidators) – Consolidating debt is a challenging business and as debt is usually the problem, it’s seen as unsecure from a payment perspective.
  • Debt Repair Services – Since the clients of debt repair services are usually having financial challenges, it makes this industry seem a higher risk.
  • Discount Health Programs – Many people don’t feel they are really getting a discount so they try to get their money back and if they don’t the chargebacks sky rocket.
  • Discount Medical Care Programs – Just like the discount health programs if they don’t save the consumer wants their money back.
  • Drug Paraphernalia – Anything that is associated with the drug trade is considered high risk. Offshore merchant accounts are commonly used for this type of business.
  • E Commerce – As the source of the payment is unverifiable at the point of sale, any transaction without the card present has a higher risk of credit card fraud.
  • Ebay Stores – Many people sell items that aren’t as described so chargebacks can be an issue.
  • Electronic cigarettes – much like traditional cigarettes, e-cigarette sales are also deemed high risk.
  • Electronics – This industry has a much higher ticket compared with many other businesses. A chargeback for a $3,000 tv or two and your account can be in jeopardy rather quickly.
  • Escort Services – This is deemed a part of the adult entertainment industry and therefore needs a high risk merchant account and payment solution.
  • Event Ticket Brokers – If a customer buys a ticket and doesn’t use it they feel like they can charge the transaction back.
  • Extended Warranty Companies – Warranties are rarely used so people try to charge back the money that has been spent paying for them.
  • Federal Firearms License Dealers – Any organization associated with guns or firearms is automatically considered in this category.
  • Fantasy Sports Websites – Just like gambling, if a person starts to lose too often they try and charge back the transaction.
  • Finance Brokers – The entire financing industry is risky. By simply extending credit to other individuals, this business is betting that a majority of them will actually pay what they say they will.
  • Financial Advising/Consulting – The high risk tag on financial advisors isn’t about the advisors or their firm. It’s about the clientele and their current circumstances.
  • Financial Loan Modification Services – Due to a clientele in financial struggles, the high risk term is applied to any payments in this industry.
  • Financial Planning – Anything that includes risk for the consumer can have consumer implications with chargebacks.
  • Financial Strategy – Another risk and reward category, if money is lost, consumers try charging back making this a high risk industry.
  • Fortune Tellers – When a person doesn’t hear what they want to hear, or what is told doesn’t happen, the fortune teller can receive huge chargebacks.
  • Furniture Sellers – High risk only when its custom furniture.
  • Gambling – If money is lost the chargebacks rise.
  • Gaming – Chargeback levels skyrocket when consumers don’t win.
  • Get Rich Quick Programs – It’s rather common in this industry for an individual to purchase the training and then chargeback their purchase saying it didn’t deliver on what was promised.
  • Google Stores – With a high rate of return on their items, Google stores are considered high risk.
  • Gun Sales (Firearm Sales) – The gun and projectile industry is automatically associated with high risk credit card processing.
  • High Average Ticket Sales – With any high average ticket, just a couple of chargebacks can mean a massive shift in how risky the account is deemed by the processor.
  • Home/Vacation Rentals – Many issues with chargebacks can take place if the consumer decides not to travel.
  • Horoscopes – Many people believe this is hocum so will chargeback transactions.
  • How To Programs – A common practice in this industry is to purchase the program and charge it back with the description that it didn’t deliver what it promised.
  • Hypnotists – Many merchants will charge back these transactions if results they hoped for were not met.
  • Import/Export Business – Another example of taking goods over country borders which automatically brings in additional risk to any processing account.
  • Indirect Financial Consulting – When using a third party to consult, the high risk status gives the processor fraud protection.
  • International Cargo – Any time you introduce a multi-country element to credit card processing, the ability for fraud to be introduced skyrockets.
  • International Merchants operating in the US – Since the merchant isn’t operating from the United States, there are many unknowns about what is happening on the other side of their business, thus increasing the risk.
  • International Shipping – Transporting goods between countries is risky and introduces all sorts of elements to the financial stability of any transaction.
  • Investment Books – consumers get upset if the investor isn’t right which can lead to chargebacks.
  • Investment Firms – As investments are never a “sure thing” this is considered a risky industry for having a merchant account.
  • Investment Strategy – Anything with future promises can lead to chargeback.
  • Knife Sales – weapons of any kind are automatically given high risk status.
  • Kratom E Commerce – Accepting payments online is high risk, and Kratom is a substance in the health and wellness industry, which is also considered high risk.
  • Life Coaching – With no tangible goods involved in the transaction, life coaching is considered high risk.
  • Lingerie Businesses – Associated with the adult entertainment industry, chargebacks abound.
  • Lotteries – In most states you can buy lottery tickets with a credit card but if you’re allowed to and the ticket is not a winner, consumers try to chargeback the transactions.
  • Magazine Sales – Many magazine sales are recurring subscriptions, which can have issues with chargebacks.
  • Magazine Subscriptions – Same as magazine sales chargebacks can be huge when a recurring subscription happens. (often referred to as recurring billing.)
  • Mail Order Companies – When something is ordered through the mail chargeback risk can go up.
  • Marijuana Dispensaries – As marijuana isn’t a legal substance in every state, this is considered high risk due to the legality of the product. Cannabis credit card processing is available through Shift Processing.
  • Matchmaking Services – Another branch of the dating tree, and often associated with the adult entertainment industry.
  • Medical Devices – If a medical device doesn’t do what’s promised the purchaser may chargeback the transaction.
  • Membership Organizations – This is another instance of where the transactions don’t have any tangible product and are easily charged back to the merchant account.
  • Merchants on the MATCH list – If you are a merchant who has been reported to the MATCH list (Member Alert to Control High Risk Merchants) or the TMF (Terminated Merchant File) you are given high risk status.
  • Merchants with Poor Credit – Merchant accounts are given based on the credit score of the business owner. It’s assumed that the business owner is going to be making the financial decisions for the business, and a poor credit score reflects on the viability of any business transactions.
  • Modeling Agencies – At many agencies models are promised the world and it doesn’t happen. The consumer then wants their money back.
  • Movie Downloads – Transference of a digital product is considered of higher risk. Also, rarely is a physical card present at time of purchase.
  • Multilevel Marketing Sales – Often associated with pyramid schemes, MLM sales are considered a risky business.
  • Music Downloads – Purchasing any digital product is considered to be of higher risk than a physical transaction. Most of the time the card is not present in a digital transaction using a shopping cart.
  • Not A US Citizen Doing Business In The US – It’s possible to get a merchant account without a US social security number, but not having a SSN will increase the risk the processor will have in issuing a merchant account for your business.
  • Online Adult Membership Sites – If you’re running a website that is adult themed and requires payment for access, this is a highly volatile account and definitely high risk.
  • Offshore Corporations (Offshore Merchants) – The international element is what gives the high risk tag when looking for domestic merchant accounts.
  • Online Gambling (Online Gaming) – Without a card being present and gambling as the activity, there are two reasons why this would be on this list. Online payment alone is risky even without the gambling element.
  • Overseas Exporting Services – The introduction of the international element is what gains access to this list.
  • Pawn Shops – There’s a general stigma that goes along with pawn shops, and it’s reflected in their assignment to the high risk processors list.
  • Penny Auction Sites – Even though the customers are usually bidding at only a penny more per bid, users will commonly charge back the transaction when they don’t win.
  • Pepper Spray – Considered a type of weapon, pepper spray vendors are considered risky.
  • Points Programs – Points programs that cost money can cause chargeback issues if points are not used.
  • Pornographic Merchants – If you’re a part of the adult entertainment industry in any way, you’re considered high risk.
  • Precious Metals – Counterfeit metals can be a problem in this industry, making it more risky to accept payments for.
  • Prepaid Calling Cards – Anything prepaid that a consumer may not use increases chargeback issues.
  • Prepaid Debit Cards – When they expire or are lost consumers want their money back.
  • Psychic Services – “Honey, did you visit a psychic? No babe, I don’t remember visiting a psychic.” I’ll just reverse that charge then.
  • Real Estate – A common target for scams and identity theft is how real estate makes this list.
  • Replica Products (Watches, Handbags, Wallets, Sunglasses, Etc…) – As the product being sold isn’t authentic to the original manufacturer, the percentage of requests for refund is much higher than a traditional merchant.
  • Rewards Programs – If rewards are not spent, the consumer wants the money back.
  • Self-Defense – Since the payment provided is for instruction and not a physical product, the self-defense industry makes this list.
  • Self-Hypnosis Services – Yet another instance where the goods being transferred are of a service and not a physical product.
  • SEO Services – With a high rate of request for refund, SEO agencies make this list.
  • Social Networking Sites – Just like a dating site, if a consumer does not get what they want from it, they always like to chargeback.
  • Software Downloads – The software industry makes their way on to this list because of the digital nature of the goods being sold.
  • Sports Forecasting – An example of paying for information and not for a product, and usually not in person where the card would be present for the transaction.
  • Startups – Every startup is considered risky, and the percentage of startups that make it is quite small compared to the number that fail.
  • Student Loans – With the cost of a college education continually on the rise, so is the percentage of loans that default and never receive payment.
  • Strip Clubs – Associated with the adult entertainment industry gains the strip club access to this list.
  • Stun Gun Sales – considered a type of weapon, which makes it a high risk merchant.
  • Supplement Sales – The request for refund in this industry is quite high due to the nature of the product.
  • Sweepstakes – “Hey, I entered a sweepstake and I didn’t win. I’d like my money back please.”
  • Talent Agencies – “I paid thousands of dollars for headshots and glamorous outfits and I haven’t gotten any paid gigs. Pay me back my money please.”
  • Telemarketing Services – Telemarketing services many times do not have the results the purchaser would like to see, so the services are charged back.
  • Telephone Order Sales – Anything ordered over the phone has a increased risk of chargeback.
  • Timeshare Companies – When timeshares aren’t used, people want their money back.
  • Travel Agencies – If trips are not taken, consumers would like their funds returned.
  • Travel Clubs – Many travel club discounts aren’t what they were promised, increasing risk for chargebacks.
  • Vacation Rental Brokers – Third party brokers on prepaid vacation can have issues when customers cancel their trips.
  • Vape Shops – The level of criminal activity and theft is higher with vape shop merchants and therefore carries a high risk label.
  • Vitamin Sales – If the vitamins don’t provide the results the merchant would like to see they chargeback the transactions.
  • Web Designer – Because this service is prone to chargebacks, it has been classified as high risk.
  • Weight Loss – Considered risky because the results aren’t really up to the company, but rather the individual has to stick to the plan to get results, often resulting in chargebacks.
  • Yahoo Stores – Since the goods sold through Yahoo can easily be returned, they are considered a risky merchant.

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