Usually, business owners focus on how to grow and expand their companies. While success is the ultimate goal, growth for the sake of growth is not always beneficial. This truth becomes more apparent during a downturn in the economy.
Whether or not a recession is going on, you should consider downsizing your business. It reduces excess and controls costs. It also strengthens your business by allowing you to put more resources into areas that provide long-term security regardless of economic trends, leading to greater profits and higher success. If you decide to do it, approach it wisely to maximize benefits and avoid negative consequences.
Create a plan
Downsizing does not automatically mean laying off employees. First, examine what the problem is and if decreasing your workforce is a helpful solution. Look at all the ways you can streamline and organize your methods. Make sure you do not cut out any departments entirely unless you are sure your company can function without them. Part ways with inventory. Have a clear vision of what your business will look like afterward.
If you have to let people go, be honest and objective but also kind and considerate. Follow all legal procedures regarding final paychecks, severance packages and the like. The other employees will be watching how you treat those losing their jobs, so maintain a professional yet compassionate attitude. Answer questions people may have about the decision. If your company faces the possibility of closing, be sure to present information in a way that will not incite panic.
Make personal sacrifices
Avoid letting everyone else suffer the effects of downsizing while you retain your income and lifestyle. Show unity by making your own sacrifices as well, whether that is selling personal assets, lowering your salary or staying longer hours to help everyone adjust to the changes. Knowing that downsizing is affecting you as well can help employees be more willing to endure sacrifices until things turn around.