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The Pain-free Guide To Downsizing A Business

The Pain-free Guide To Downsizing A Business

It might not be the most pleasant part of running your own business – and hopefully, you will never be forced into this situation – but downsizing can sometimes be the only way out of a tricky situation. Thankfully, there are ways to try and stay well away from this situation but they might not always be that effective. It all depends on what state your company is in.

So, do you think you aren’t going to be able to continue running your company without downsizing? Fear not; it might not be quite as bad as it seems. Sure, you will probably have to let some of your employees go, which can be very disappointing and upsetting for them and you, but all in all, the whole downsizing process shouldn’t be too stressful. Thankfully, there are a few different ways you can ensure that it all goes as easily and smoothly as possible.

Ready to get your downsizing over and one with? Here is everything you need to know to ensure that downsizing your business is as pain-free as possible.

Downsizing A Business

Don’t Ignore Things

You will notice all the signs that your business is having a rough time early on. You know the kinds of things: slowing revenues, a big dip in sales. Of course, these can frequently happen but things often improve after a couple of weeks. However, if you find that the warning signs stay around for more than a couple of months, then there could be a deep-rooted problem with your company. You might want to try and ignore these signs so that you can try and power through them. But that really isn’t a good idea. If you try to carry on as if nothing is wrong, you will find that things will only go from bad to worse. So, once you notice the early signs, keep a check on them. If they persist for a couple of months, it looks like it is, unfortunately, time to start the whole downsizing process.

Plan It Well

You need to set out a plan for your downsizing process. This ensures that you do everything that needs to be done and that you don’t risk making mistakes or forgetting to take care of one particular aspect of business. You should write this plan like a business plan – make sure it sets out where you expect to be a couple of weeks after the beginning of your downsizing efforts, and then one month after, and eventually, you plan should set out how your company will look a year after the downsize. If you struggle with writing your downsizing plan, you should enlist a service like so that you can correctly manage all the changes with your company tech and staff numbers. Keep this plan close at hand so that you can quickly check and cross-reference it whenever you need to.

Inform Your Employees

It’s essential that you tell your employees that you are downsizing before you begin. There will certainly be lots of rumors going around and these could be very distressing and stressful for your staff. So, tell them straight before any rumors develop and spread around the company. Don’t worry if you haven’t figured out exactly how many employees you will be cutting from your payroll – it’s just important that you tell them that there will be cuts so that they aren’t surprised once you start giving out redundancy packages. However, once you do tell your staff that you are going to downsize the business, you will quickly need to figure out who you are going to axe. You shouldn’t leave such a long time between these two decisions as it isn’t really fair to leave your employees hanging in limbo.

Career Tips

Sort Out The Legal Side

Of course, downsizing a business isn’t just about cutting your employee numbers and reducing your office space. There are also a few different legal things that need to be sorted out. First of all, you will need to comply with the Worker Adjustment and Retraining Notification Act (WARN). The various requirements to comply with this act will depend on which state your business is trading in. You can find out more about them online at You must also ensure that your redundancies are rolled out legally as well. There are certain documents and contracts that you issue to your employees once you hand them their redundancy notice.

Success Guide

Always Be Transparent

Once you do begin to downsize your country, you need to make sure that you are open and transparent with your employees. If you aren’t, you will find that this can add further fuel to all the rumours that are flying around. Not only that, though, but it could really stress out your staff, especially if you haven’t announced who will be affected by redundancies just yet. If any employees reach out to you with questions, make sure you answer them as truthfully as you can. When you are making someone redundant, it is also important that you give them very clear reasons as to why they are the one being made redundant.

Be Compassionate

As well as being transparent, you should try and be as compassionate as possible. After all, people are losing their jobs because of you! Make sure you always listen to your employees at every chance you get so that they understand that you really do respect them. Your employees will be going through a wide range of emotions during this stressful time and it is important that you are accommodating and as understanding as possible. This will help to protect your company’s reputation as well.

Look For Smaller Offices

Your finances will have certainly taken a big hit, which will be the main reason for you downsizing your business. In order to improve your finances as much as possible, you should physically downsize your company by moving into some smaller offices. This will reduce your monthly rent and your overall company expenses for the year. Ideally, you should try and keep your business in the same location as to where you are currently based so that your clients and customers don’t have to spend too much time trying to find your new address. Plus, this won’t change your employees’ commutes too much either.

Take A Hit Yourself

It’s fair enough making cuts in your various business departments and reducing the number of employees. But what about you? It’s really important that you are completely fair to all your employees, and that means that you need to take a hit yourself. And it should be something that your employees notice so that there is no chance of them thinking that you are getting away completely scot free! One way you can take a hit yourself is by cutting your salary. This should ease some of the financial pressures that your business will be currently facing. You might also want to cut the amount of time off you usually take. So, for instance, if you normally work from home on Fridays, you should now be in the office five days a week. By taking a hit and putting in a bit more effort with your business, all of your employees can see that you are taking this situation very seriously and that

Make Cuts Equally

As well taking a big hit yourself, you should also try and make sure that you are making cuts across the board in your business. That means that there shouldn’t just be one department taking the brunt of downsizing. For example, you shouldn’t only make redundancies and other financial cuts in your marketing department. Instead, rather than making one big cut to just the one department, you should make small cuts to each of your different departments. That will help your company continue to trade and run as normal even while you are moving forward with the downsizing process. Not only that, though, but it will also come across as a very fair approach to your employees.

Lose Some Of Your Inventory

Some business owners try and hold onto most of their inventory while they downsize even if they don’t currently need it while they are a reduced size. They keep a hold of it because they think that they might need it again at a later stage, such as if they ever grow in size and capacity again. However, it really isn’t worth holding onto this excess inventory. You will probably be reducing the size of your office so might not have the room to store any excess equipment and tools. You’ll be much better off selling the inventory to try and bring in some extra cash to the company. You can always hire or rebuy any inventory that you might need again at a later date. But only do so when you are sure you need it and that you can afford it!

Downsizing doesn’t have to be painless for you or your company. Just follow the above steps to ensure its success!

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