All companies go through ups and downs. One minute you’re flying high, getting loads of business through a contact, or a well-ranking webpage. The next minute it all dries up and you’re left wondering how you’ll make it through the next quarter. In moments of crisis, businesses have to take extreme measures to stay afloat. More often than not, they look at cutting staff, since employees usually represent the greatest cost.
But is this such a good idea?
Probably not. Here’s the problem with cutting staff. When you cut staff, you lose all of that talent and expertise you once had. You also gain a reputation for being a company that lets go of staff quickly. And, as a result, people are less willing to come to work for you in the future. There’s another problem too. When the recovery does come, you’ll have to go through the expensive process of hiring again. Some hires can cost firms up to a year’s worth of salary and benefits, especially for senior roles.
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So that begs the question: what costs can you cut that don’t involve laying people off? Let’s find out.
Switch Some Staff Over To Part-Time
When the global financial crisis hit back in 2008, what was the first thing that many companies did? Switch their employees over to part-time contracts, of course. They didn’t want to lose their employees for what seemed like a temporary blip. But they also recognized that paying them a full-time wage was sheer folly. Because of the state of the job market, many employees agreed to the temporary lower pay. And it worked. Companies kept their staff. And as the economy began to recover in 2010, they got back on their feet remarkably quickly.
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For startups and small businesses outside of a recession, this tactic might be a little more difficult. The economy has recovered significantly, and there are much more opportunities for workers to pursue. But you could appeal to your staff’s desire for flexibility. No doubt some members of your team would like to work fewer hours to spend more time with their families. Check with them whether they’d be willing to make a change.
Negotiate With Suppliers And Keep Your Costs Down
It’s in the interest of your suppliers for you to stay in business. And so when you struggle, they struggle. The best approach is to explain to your suppliers the financial difficulties you’re having. Often, they’ll be able to adjust the terms of the contract or offer discretionary rates. Sometimes, though, they’ll refuse. If they do, shop around for different suppliers. Often a saving of just five percent can have a huge impact on your company overall.
Also, look for opportunities to keep the cost of equipment down. Instead of replacing a whole laptop because of a dead battery, look for cheap wholesale batteries to cut costs. Also make sure that when you leave the office, all of your electronics are in sleep mode or are shut down. And stop buying paper and ink cartridges for $50 a pop. Go paperless instead.
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Get Your Staff To Work More Efficiently
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If you’re honest with yourself, are all your employees working at their maximum efficiency? Probably not. Take your sales staff, for instance. Are they out selling to clients? Or are the spending their time chasing up client accounts? Experts at Change Factory has estimated that sales staff spend as little as 60 percent of their time focusing on selling. The rest of the time they’re doing work that should be left to the admin staff.
Getting your sales staff to work more efficiently turns the cost problem on its head. More time spent selling means more sales, more revenue, and more profit. More profit is just another way of solving a cost issue.
When facing cost challenges, other experts recommend companies get serious about flagging staff members. One thing you can do is ask yourself whether you would employ all your team members today if you had the chance. Go through the list of all your employees and be honest about who you’d be willing to take on. Often employees just need that extra nudge to dramatically change their productivity at work. A little training can often provide the boost that you need. But so too can some mentoring and counseling. If you can find out what it is that excites an employee, you’re already well on the way to improving their output. The more output, the greater the chances that your company will have of making it through a rough patch.