It’s a fact! Good business sense tells us that when times get tough and the income flow is lagging, we should conserve our financial resources and manage as many expenses as possible.

While it’s also good business sense to carefully select what costs you’re going to cut, too many companies cut expenses in the wrong places.

Unfortunately, these cuts can do more damage to a company than any lagging economy. Let me explain.
There are two expense areas where companies should be focusing: hard costs and soft costs. The hard costs are the general critical overhead expenses which are usually set such as electricity, rent, taxes, telephone, insurance, etc.

The hard costs are the general critical overhead expenses which are usually set such as electricity, rent, taxes, telephone, insurance, etc. Some of the expenses can be slightly managed, such as conserving electricity, but usually they don’t impact the bottom line that much.

The soft costs are a different story. They are very manageable and easily cut. Usually first cuts occur in areas that are not critical to the daily operation. Office supplies, nonessential services, unneeded trips, some company perks are some examples.

There is another aspect of expenses that many companies misunderstand. There are some expenses that are not just an expense. The term – ROI – or Return on Investment should translate into money invested for a value – equal or more – returned. Unfortunately, when just looking at expenses on a balance sheet, the ROI is sometimes missed and cuts are made in areas where the ROI is important or sometimes critical.

For example, a typical expense area that is usually cut, and dramatically affects the company the most, is training. Many companies realize that this is the highest ROI for any company.
It’s unfortunate that more top executives don’t’ realize that training is even more important when times are tough. Unfortunately many companies place training into a soft cost category that they feel is unessential.
There were two partners discussing the need for training in their company. One was concerned that they would spend the money in training and the employees would get better and then leave. The other partner calmly replied, “I see your point, but consider what would happen if we don’t train them and they stay?”
While training is critical to a company in skills and knowledge subsets, it’s also equally important to let your employees know they are a worthwhile investment. Employee morale is extremely important when times get tough.

In reality, employees know that times are tough and are aware of all the expense cuts taking place. There might even have been some personnel cuts. So now they are being asked to do more work and, in some cases, with no additional training or support. How do they feel? How do you feel?
From an employees’ viewpoint, this is not a good situation. Now comes the added stress of doing more work, and perhaps not being fully qualified, and worrying about the next group of cuts in case things get worse.
Instead of cutting training budgets, successful companies realize that maintaining employee morale and providing training which will help them do their jobs more effectively is a great investment with a high ROI. The employees realize this, too. Low employee morale can cause greater problems within a company.
While cheerleading might help morale, employees still have a strong need of ‘how to’ skills and the clear understanding that their company truly cares enough to help them be better prepared for today’s business environment.

However, the types of training you offer should be carefully selected to fit the needs of the company and employees. Focusing on the immediate and future needs of your company, industry, current and potential customers, can help guide your training needs.

Common sense also helps in targeting appropriate topics. If sales are down, sales training would be the target. If customer service is critical, then focus on that. If morale is down, provide training which will help boost morale and offer support and encouragement.

OK! Training is important, but budgets cuts are dictating that you can’t have the big meetings you’ve had in the past. Getting everyone together in one place can be prohibitively expensive. You just can’t pay travel expenses get everyone together but you still want to have some sort of training.

No problem! Teleseminars are another avenue to consider. Teleseminars are convenient and easy to conduct via telephones regardless of where everyone is. Once a date and time is established, all they need is to do is download a workbook from a web site, dial a specific phone number which connects everyone to a bridge line, mute their phone and the training seminar is on. Teleseminars are usually presented in 60 to 75 minute sessions. They can be interactive and are focused on your specific needs. Teleseminars can be a one time event or a series of programs scheduled over time to meet your needs.

Training is a powerful ROI. Whether you bring in a professional speaker or trainer or arrange a teleseminar, the main focus is to keep everyone trained and motivated to insure that you keep your ground, not lose it.

Yes, managing expenses and conserving funds is important. However, keeping your employees trained, ready, and able to meet today’s challenges in an ever changing and competitive business environment is more important than saving a few bucks.

Employees are a company’s greatest assets.