Cost Reduction

If we’re to survive this, the key will be in cost reduction. Looking through the Profit and Loss, we can make the following adjustments:

Staff Costs

Believe it or not, I wouldn’t consider furlough for this business. Chiropractors form deep personal relationships with clients and losing your practitioners will lose you customers. However staff costs are the lion’s share of the overhead, so instead, I would ask all members of staff to take a 50% pay cut for a few months.

There is no doubt that this will be an unpleasant conversation, but a whole lot better than furlough. If explained correctly and phrased as the alternative to redundancies I think it would be possible to achieve.

This will reduce payroll from $448k p.a. to $224k p.a. … saving us $18.5k per month. I’m also going to keep the employee benefits intact to look after them as much as possible.

Misc. overheads

We can scrap utilities, office supplies, tech support and x-ray film easily. That saves $25,035 p.a … $2,086 per month

The harder list to reduce is rent, legal fees, accounting fees and professional organization membership. Assuming you can negotiate hard with these let’s go for a 10% reduction on average for the 6 month period. That’s $2,830 pa, or $235 per month

Summary

Net savings per month are $20,821, bringing us from $47,000 per month to $26,179 per month. With a cash balance of $140,000 we now have 5 months of survival which should carry us through.

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Author

With a tech career that started before internet explorer was launched, I’m a technology focussed strategist with over 25 years at the forefront of technology disruption. Historically I’ve owned and managed agencies centred around Web and Mobile transformation helping B2B and B2C companies across the globe, from SME’s to Fortune 50.

Across the years I have been through 3 mass recessions and am putting the knowledge and experience of more difficult times to use to help businesses see what they have, what they need to succeed and how to bridge the two.