From the course: How to Protect Business Profits in a Financial Downturn
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Exiting contracts
From the course: How to Protect Business Profits in a Financial Downturn
Exiting contracts
One potential strategy to reduce your costs in a recession is to exit contracts. Now, I'm not talking about walking away completely from an agreement you have, I'm talking about looking at the buyout clauses and the exit clauses if you were to exit an agreement. Knowing what the costs are can help you make an informed decision, and you might find that some agreements might be more beneficial to exit. If you have a contract for almost anything, a mortgage, a car lease, office space, almost any of those can be broken. And there are usually terms for them that are clear in the agreement. In a lease, for example, you might be paying $10,000 a month for 24 months, so a $240,000 lease. A buyout clause might be $40,000. If your team is working entirely remotely, if you exit that agreement and pay the $40,000 over the course of years, you might free up $200,000 dollars. So those kinds of agreements can save you a lot…
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