Friday, March 06, 2009

Saving Your Business from the Recession

There is panic in the air. Owners, managers and CEOs are all looking for a way to save the business. It is like you are on an airplane diving toward the ground and you need to know how to level out and stay flying.

The standard answer is cut costs, but is that your only option? Cutting costs may be needed but there may be other options that could do more good then harm in the long haul. The quick answers are layoffs and hour cut backs but these choices often do more harm then good to your company and your viability over the long haul.

You have a heavy investment in each employee in your company . They each have been carefully trained and positioned tp maximize your success. They know all the ins and outs of what you do and how you do it. Your success up to this point has come from these very people doing what you do successfully everyday to satisfy your customers and keep you in business. There is no simple choice in picking who you can afford to lose. If you could afford to lose them why were they there to begin with?

Cutting back hours generally cuts back on opportunity to meet the needs of your customers and on the resulting sales. If you are not there when they have a need they might go else where. Your competition is waiting for them and has probably already contacted them should they need anything. Have you been reaching out?
Also the reduction in hours usually drives away your best employees who can easily find a job with your competition, leaving you far shorter then what you expected.

If these are not the answer, than how do you weather the storm of recession and come out a viable company on the other side?

First, let me suggest being open and honest with your employees. They are just as aware of the financial events going on around them as you. Get them involved in finding solutions and reducing costs. Be open to all suggestions big or small. Remember in order to eat an elephant you are going to have to take one bite at a time.
Look at leases both property and equipment, sit down with the lease holders and see if you could adjust the cost by 25-30% for the next six months. Ask to have these adjustments added on to your last six months of your lease. They would still reap the entire value of there contract and you would gain a shot of capital to get you through the long haul.
Look at inventory and your practice of maintaining said inventory. Perhaps you could cut inventory by 25-30% since your expected sales will probably decline by that amount anyway. Why tie up capital and space with unnecessary inventory.
Look at utility bills. Do you have a light that is on all the time, say the bathroom or the break room? Install a thirty minute timer, that subtly reminds your employees to get back to work, while it saves you energy and money.
Perhaps there is a piece of equipment or a company vehicle that doesn't get used anymore. Find a new home for that unnecessary item and real in some cash to weather the storm. Someone might be looking for that very item to help them cut costs and weather their storm.

I got you started...........Get out there and have a discussion with your employees and see what other great ideas they might have. You never know, perhaps there are some who are willing to reduce their hours without you even asking.

additional reading:
Street Smarts: Surviving the Recession

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