The bills pile up, the numbers don't add up, and the pressure to make decisions weighs more than ever. And there, in that chaos, a recurring idea arises: firing staff. But is it really the best way out or simply the fastest?
Firing affects, and a lot. Not only the team, which is left with uncertainty and frustration, but also the reputation and even the stability of the business itself. Before making such a drastic decision, we recommend that you stop, analyze the situation well and assess all options very calmly.
Diagnose the underlying problem
The first step to getting out of any slump is understanding where the problem comes from. Is it just a temporary drop in sales? Are there structural problems in the business model? Have costs suddenly increased? There's no point in patching things up if you don't know what's really failing.
To begin with, you have to do a thorough review of your accounts. How is the cash flow? Where is the money going? Are there expenses that are useless?
It is also important to look beyond the numbers and observe how the team is working: is the atmosphere tense? Is there a lack of communication? Are they demotivated?
In many cases, having an external financial advisor can be of great help. Someone with experience and no emotional ties to the business can provide a more objective view and identify areas for improvement that you may be overlooking.
Reduce costs without reducing your team
Reducing expenses does not necessarily mean cutting staff. In fact, in the long term, it would not be uncommon for a reduction in the workforce to end up taking its toll. Before firing, there are options that can help reduce costs while keeping the entire workforce.
For example, one option is a temporary reduction in working hours. This involves agreeing with employees to reduce hours and, proportionally, salary. This way they can maintain their jobs, and the impact of the crisis is distributed in a balanced way.
Another possibility is to temporarily suspend bonuses or additional incentives, always explaining the situation transparently.
Teleworking is another tool. By leaving the office or premises, you will save on rental, utilities and transportation costs, which is a considerable economic relief without affecting performance.
In any case, the most important thing is that you communicate honestly with your team. Clearly explaining the situation and the measures being considered generates trust and a much greater commitment than making unilateral decisions.
Renegotiate contracts with suppliers
Many times, we take it for granted that external contracts cannot be negotiated and we think it is easier to reduce the workforce. However, most suppliers prefer to keep a customer than lose them, which gives you the opportunity to propose an adjustment to your agreements. Again, "people understand each other by talking."
Sincerely state your situation and look for agreements that benefit both parties. For example, there is the possibility of extending payment terms, splitting invoices or even negotiating a temporary reduction in rates. You can also propose long-term collaborations or exclusivity agreements in exchange for better conditions.
Be clear that negotiating is not asking for discounts for the sake of it. It is about finding creative and beneficial solutions for both parties, maintaining a relationship of trust.
Is it possible to open new sources of income?
For the self-employed and small businesses, standing still is usually not an option. It is in their DNA to innovate and look for new ways to generate income.
Is it viable to expand the offer of products or services? Perhaps you can adapt your current proposal to the new needs of the market or launch a digital product, such as online courses or consultancies. You can also look for collaborations with other companies to offer combined packages or joint solutions.
A small adjustment to your business model can open new avenues that you may not have valued because you were too focused on following your plan.
Seek external legal and labor assistance
Apart from the classic dismissal, there are other options, such as the aforementioned reduction in working hours, temporary layoffs or the temporary suspension of employment. Your employees may not accept this type of solution with joy, but they will surely prefer it to being out of work.
There are also ways to improve accounting and taxation that you may not be considering.
In order to see all the options and present them well, you need the help of specialized professionals: tax advisors, Lawyers for Proper Dismissals, Human Resources professionals... They can all help you find solutions and, above all, avoid mistakes that worsen the situation.
Of course, don't forget that some public administrations offer aid and subsidies for SMEs in crisis.
Get different clients than the ones you already have
You've probably heard of the risk of "putting all your eggs in one basket." In difficult times, it is much better to have several options than just one. Therefore, you have to work on diversifying your client portfolio.
What does this mean? That you have to study other markets or adapt your products to reach another type of public.
In addition, if you haven't already done so, work to ensure that your company has an online presence, seek external help to improve marketing and run customer acquisition campaigns. It also wouldn't hurt to attend events to network and expand your network of contacts.
The more varied your client portfolio, the more resilient your business will be to unforeseen events.
Motivate the team to support you
You always need your team to be at 100%, but in the face of a crisis you have to find a way to keep their spirits from flagging. If employees believe there is no way out, they see you as lost and start to fear losing their job, they are likely to start working worse.
If you want them to stay with you, you have to convey confidence and professionalism. Make them see that you are making an effort to move forward, that you don't want to lose them and be honest with them: you need their help.
If you get them to internalize that they are part of the solution, they will row with you until the company works as before.
Analyze the way of working
When a company has been operating for some time and continuous improvement is not carried out, the processes end up becoming rarefied and inefficient, which translates into a loss of time and money.
Automating administrative tasks, implementing project management tools and reducing unnecessary steps are just some examples of what you can do. Sometimes, small changes in the production chain or the digitization of some tasks can get the business out of the slump.
To analyze this, you have to question each process: is it really necessary? Can it be simplified? Are there technological tools that can make it more efficient?
Take care of the mental health of the entrepreneur
Finally, but not least, there is your well-being. The pressure, decision-making and uncertainty will take their toll if you don't take care of yourself.
At this point, we recommend that you try to delegate responsibilities, seek professional support and do everything possible to maintain a balance between your personal and work life.
