Editor’s note: This article was first published in July 2010, during the post-2008 crisis in Spain. The tip about energy-saving bulbs predates today’s LED lighting.
Small businesses have been hit just as hard by the crisis as any larger business. It doesn’t matter whether yours has 3 employees or 20.
Now more than ever, your employees are the closest thing to partners in your company, and you need to count on them. Here are some ideas on how to manage your business.
1. Talk to all your employees: Every one of them matters, from middle managers to the cleaner. They have the most to gain from the business doing well, since that’s how they’ll keep their jobs. They should know the company is going through a difficult time, although you shouldn’t give them the real numbers, so that fear doesn’t take hold, dragging down their performance or tempting them to jump ship when a competitor makes them an offer.
2. Think hard before laying people off: Letting someone go because sales have dropped is madness if, a few months later, you’ll have to hire and train someone new. On top of that, you’ll have to pay severance. Look for measures that avoid this, although if there’s no other way, it will have to be done.
3. Negotiate with your employees: Before laying anyone off, call a meeting with them. Propose a reasonable pay cut and a few more hours a month (also reasonable). Stress that it’s a temporary measure to avoid letting some of them go, and that when things improve they’ll be rewarded in some way. They’re sure to understand.
4. Look for ways to save: Now is the time to find new ways to cut costs. In general:
- Electricity: There may be rarely used rooms with lights left on all day, or non-essential machines using power. Use energy-saving light bulbs.
- Equipment: Keeping computers and machinery well maintained will avoid costly repairs in the long run.
- Vehicles: Do you need all of them, or could you sell one and save on insurance and maintenance? Selling vehicles you no longer use will also bring in cash right away.
- Phones: It’s time to make your employees aware that company phones are only for essential company business, not personal calls.
5. Negotiate with suppliers: You make more money when you buy than when you sell. Now is the time to look for new prices and scan the market for products with identical characteristics at a lower price. Once you find them, always give your current suppliers the chance to match the price, since, ethically, they started out with you; they’re part of your business. Even so, if there’s no room to negotiate, you have to look out for your business’s survival. Business is business, and a friendship with a supplier isn’t good business if they don’t help you when you need them.
By following savings measures like these, you can save more than €1,500 a quarter (depending on volume). It may not sound like much, but it’s vital money that stays in the company’s coffers.
Further reading
- Five ways to grow your business
- Why new businesses fail
- The entrepreneur’s mindset
- How to be a successful businessperson
Featured image: Bill Branson (Photographer), Public domain, via Wikimedia Commons.
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