Downsizing for stability

There have been many recent reports in the media about different employers that are considering the option of downsizing their business in order to secure the long term viability of the business.

The process of downsizing a business normally focuses on the legal, economical and financial aspects of the business. It is bad enough to receive the news that a company is planning to downsize. Hence the business will have to go through a process of restructuring and change. It is a totally different ball game if you are the person that has to make most or all of the important decisions. Naturally the tough decisions about what to reduce, what to eliminate altogether and who to lay off are far from easy. Even so they are decisions that must be made.

The Process

The legal implications of downsizing are often difficult to work out, who should get what redundancy package and who or who does not have employment rights can be a minefield. The economic aspects of downsizing mean that some of the work that will be undertaken during the process falls within the remit of being management related tasks. Keeping your eye on the financial side of the business is an accounting task. Ultimately the bottom line resonates around what the business can or cannot afford financially. Needless to say it pays dividends to have a good set of financial records that can be referred to for guidance.

Who can help?

No doubt if you are the owner of the business then you may well find the whole process traumatising to say the least. It is difficult sometimes to separate the tasks in hand from the emotional side of the business. At times like this it pays enormously to have a good accountant to help and guide you through the process. Impartial advice, professional knowledge and moral support can go a long way towards - reducing some of the emotional and logistical barriers that may be encountered whilst going through the process. Additional support from a business planning adviser may help to prevent serious errors being made that may damage the sustainability of the business.

What are the alternatives?

One alternative to laying off staff may be to implement furloughs. Furloughs are mandatory time off work periods with no salary. Some employees may well prefer a period of time away from work with no salary – in the short term. Opposed to the long term effects of losing their jobs completely. This process is generally implemented by employers as a cost saving measure before thinking about the harder options of laying staff off. As with any other process there are advantages and disadvantages of using of furloughs. Other options may revolve around asking workers to either reduce their working hours or offer their labour on a voluntary basis for a fixed period of time.

Whatever you decide to do you will most certainly need a good strategy. You will need to find a strategy that will encompass good practice and give your business a new lease of life after downsizing.

Good luck.