No business owner enjoys the thought of laying off employees, but during a financial crisis, it can feel impossible to find the best way to weather the storm. Layoffs should be the last resort for any responsible business owner, as the team you have is critical to your success.
Laying off staff can also make it harder for you to take on good employees in the future. You should look at other cost-cutting options to find a solution to your financial crisis and consider new funding avenues to help you stay afloat.
Hire The Right People
Have a thorough and measured process for taking on employees to avoid needing to cut back in the first place. Choose the most productive and qualified people for roles who will bring more benefit to your business than cheaper or less experienced labor.
Cut business outgoings by eliminating overtime for your team. Explain to your employees why this is necessary and reassure them that overtime will be reinstated once the business is more financially stable.
Delay Offering Raises
Wait until the business is more secure before offering raises. Discuss this with employees and give them an estimated timeline of when they can expect their promised raises. Ensure you meet any contractual obligations with employees. Ask if applicable employees are willing to forgo their raise until a better time.
Avoid giving out bonuses to employees and management. Cut your own bonus and paycheck to show that you’re in this together. Offer a more attractive bonus in the following years if your business reaches a set goal to help motivate staff.
Offer Employees Furlough
Offer temporary unpaid leave to team members that want to take it. Assure your team their jobs will be available when they return. Don’t offer furlough to any employee essential to running the business properly. Offer help to employees to find temporary work while furloughed.
File For Bankruptcy
File bankruptcy to make paying off debts more manageable. Choose a suitable law firm to help you when filing bankruptcy. Work with experts such as s Farmer Law, based in Texas. Look for bankruptcy options that allow you to continue operating while paying off debts.
Ask employees to reduce their hours where possible. Spread the reductions out among all staff, so no employee’s pay is impacted too significantly. Reassure your team that hours will return to normal as soon as possible.
Many businesses have adapted to remote work over the past few years, and doing so can boost your bottom line. Make your business solely remote work-based and sell or end your tenancy for your office space. If entirely remote working isn’t possible, downsize your office for cheaper rent.
Look For Government Help
Research State and Federal aid options to help you retain staff. Apply for any that you may qualify for and use the funding wisely.
Offer Voluntary Layoffs
If layoffs have to happen, offer voluntary layoffs first. Ensure your team knows that this is their choice, and give details of the severance package you offer.