It can happen to any business. You might have had a bad year due to the widely felt ripples of the pandemic, or there may have been unforeseen changes in the market. Whatever the case, if you need to downsize your business, then you need to make sure that you do it as strategically as possible. You want to give yourself the best possible chance of getting things back up and running as they were before.
Start cutting costs as sustainably as possible
The first thing you should do is look at the overheads that you can start cutting without affecting the productive capacity of the business too much. Things like marketing might be crucial for the business, but cutting advertising costs might help you hold on to more of your staff and your assets. You might need to run the business a little leaner in the future but it can be worth it to save more of it.
Carry out layoffs with care
If you’re at the point of downsizing, then cutting your running costs likely isn’t going to save you from having to lay off some team members. The first thing to make sure you do is to ensure that it’s legal by having standardized selection criteria, making sure you meet your minimum requirements, such as severance packages, and have the proof at the ready that layoffs simply can’t be avoided. You can help soften the blow somewhat by adopting policies such as early retirement plans or offering redundancy packages for those who volunteer to be let go, as well.
If you have to sell assets, sell them well
The sad reality is that letting go of staff is often economically more viable than selling machinery and assets because employees might not as vital to keeping the business running as the right machine. However, if you do have extra machinery that isn’t vital, then selling them can offer a lot of financial relief. You just need to make sure that you’re selling them to the right people or companies. If you’re going to sell CNC machinery, you should see it to a business that deals specifically in manufacturing machinery. You’re much more likely to get more in return that way.
Sell off some inventory
You might feel tempted to cling onto your inventory, be they the products you sell or materials you use in production. However, selling excess inventory might be better for you, since it helps you turn them into liquid assets that can be re-invested back into the business to help you better keep hold of other assets or employees. What’s more, inventory costs money to keep, so you want to reduce your costs this way, too.
Downsizing is always going to be difficult and you’re going to have to make some painful choices. However, if it has to be done, then you should rip that band-aid off before you have too much time to second-guess yourself while ensuring you have considered the pros and cons and are making the objectively best choice.
No comments yet.