The current economic climate has been disastrous for countless small businesses and even for substantial corporations that have been around for decades. Downsizing is a clever way to keep your establishment afloat, and it needn’t be permanent. A downsizing strategy can be a temporary measure. Here are the top five things to consider when you are downsizing your business.
Do – Choose The Best Way To Reduce Your Overhead Costs
Look for ways to reduce your overheads before you go for a complete downsize. The reason this seemingly obvious advice is a gold nugget is that people often fail to recognize simple opportunities to lower their monthly overheads. For example, restructuring a service-based business to operate from a virtual office makes no difference to clientele, but can save you a significant amount of money. Virtual and serviced office solutions are far more cost-effective than paying rent.
Do – Look At Hiring Freelancers
Another way to cut costs without actually reducing your operational capacity (which gives you the opportunity you need to grow your profit margins) is to stop hiring employees and outsource as much of your work as possible. That means you can pay people on a commission basis only, only spending money that is already coming into the company.
Outsourcing tasks to freelancers often serves entrepreneurs better because freelancers tend to stay on their toes – they treat your company as a client rather than an employer – which means you can expect excellent service. You also have no HR costs (annual leave, sick leave, etc) to factor in.
Do – Bring In A Professional To Help With Restructuring
You have decided a complete restructure is going to be the best way to move forward and keep your business operational. It’s a brave decision. Knowing how to cut costs is something you can do on our own – you know which services are essential and where you can cut back. However, a complete restructure is far more technical.
Hiring a professional who specializes in company organization can set you up for success going forward because they will allow you to maintain as much capacity for productivity as possible while reducing costs.
Don’t – Ignore Legal Risks
Legal backlash occurs when you fail to meet your obligations, or when you forego moral considerations and act rashly (like sudden dismissals of staff). Sometimes a shortcut is tempting, but they can turn into long-winded and costly nightmares very quickly if you’re not careful. Be aware of your obligations and meet them to the best of your abilities.
Don’t – Rush The Process
It’s tempting to make the changes instantaneously. You have probably been feeling the pressure for some time and now that you have made the decision to downsize, the inevitable might as well happen now. With any large change, doing it gradually is the best approach. It gives your clients time to adjust and your team a chance to shift their mindsets. It also allows you to address the hiccups that inevitably pop up at each stage of the process, preventing complete chaos and disaster.
Though downsizing may seem like you’re taking a step backward, the truth is, this could be a fantastic opportunity for your business if you go into it with the right mindset. Whether you end up permanently working from home using a virtual office, or simply scaling back until the economy picks up again, if you follow the advice above, you’ll be well-placed to make it through these difficult times. Then you can look at growth strategies once again.