“Economic downturn”,”recession”,”layoffs” — all these terms seem to go hand-in-hand. This is certainly the case in the large corporate sector where job cuts are now widely accepted as the de facto way of reducing costs and placating shareholders.
The trend in the small business sector, however, is quite the opposite.
Business Week reports that small businesses upped the hiring ante in 2008 from 0.26 percent to 3.3 percent and the trend is expected to continue through 2009.
So how does the savvy, long term minded entrepreneur cut costs without resorting to layoffs?
Many small businesses are blessed with a degree of flexibility in their day-to-day operations that larger corporations can’t match. Consequently, these businesses are more apt to invest in alternative cost cutting strategies that will help them stay profitable despite the recession.
Layoff Avoidance Strategies
Here’s a brief compilation of some of those alternative cost-cutting approaches that can help your small business stay profitable without the need for sweeping workforce changes:
1. Cross-train Employees – Before layoffs became the norm in the 80s and 90s, many companies used cross-training techniques as a way of effectively pre-empting and surviving the hard times.
It’s a model that can work well across many businesses from marketing firms to restaurants. Cross-training allows the agile small business owner to shift and redeploy resources to key business areas when needed; it also keeps employees on their toes and can improve teamwork. Have employees shadow each other and learn new disciplines on a regular basis.
Get tips on to cross-training your employees here.
2. Hire Independent Contractors – If you need to supplement your core business services to stay competitive or need extra help to keep your business on track during a recession, read more about the tax benefits and regulatory obligations of working with an independent contractor.
If you find yourself forced to cut your workforce, you might also want to consider retaining key skilled personnel as independent contractors. This gives you and them the flexibility to remain invested should you wish to consider re-hiring that employee when things pick up.
3. Learn the Ropes of Tax Deductions – Make sure your business is getting all the tax deductions it deserves. Too many small business owners don’t fully appreciate just how much money can be saved with tax deductions – easing the temporary burden of retaining a full workforce during a recession.
If Layoffs are the Only Option
If the layoffs are the only option for your business, the government does offer assistance for businesses and their employees to help you understand the regulatory side of downsizing. Read more at these links:
More Tips for Surviving the Recession
The government offers a series of free online self-paced courses covering many of the skills and programs that can help businesses through the tough times, including advice on tax, loans, marketing, and more.
Here’s a selection of other tips and strategies to help your small business stay profitable through the recession.
- Don’t Wait for the Stimulus – Act Now! – Align yourself with business sectors expected to receive a cash injection from the new administration while taking advantage of small business funding, training, and mentoring resources from the government.
- Uncle Sam Can help you find Opportunity in Today’s Economy – Whether you are upping the marketing ante to keep your brand visible, growing your business through acquisition, or building your skill base, you will need capital. Here’s how the government can help.
- Fast Cash: 25 Ways to Save Money in Your Business Today
- Steps to take to Survive the Recession
- Our Strategy for a Recession? Inbound Marketing. What’s Yours?
- Recession-Proof Your Business