The following is an excerpt from a terrific article written by my accountant addressing the concerns of small businesses in this difficult environment.
The headlines read: Bank of America lays off 35,000, Boeing to lay off 4,500, Citibank lays off 10,000. Numbers like these represent on average a 10%-15% reduction in workforce, which is what we are seeing at many of today's large corporations. However, small businesses employ over 50% of Americas's workforce. Typically you would see small businesses laying off similar percentages of their companies workforces but if you surveyed most small business owners you don't see this happening. Why?
Unlike the large corporations in the headlines today, small business owners facing these hard choices have a more personal human element attached to the decision. For a large corporation the head office directs a VP to layoff a certain number of people, the next VP directs his division and so on. Typically the person actually communicationg the decision to the employees had very little to do with it, "It comes from the top". Additionally, there is a certain fellowship in numbers. A specific employee isn't being singled out as expendable, but rather, one of many.
For the owner of a small business, the layoffs are usually decided and carried out by the actual owner of the business. The cuts are directed at people they see every day, people who they might socialize with and whose families they know. Often the level of personal interaction is such that one knows if their employees are struggling to save for their child's college education or that an elderly parent is ill or their spouse has been laid off. To let employees go is more than just a business decision, it's persona and the emotional toll is such that many small business owners delay these hard choices. A delay that can cause a small company to incur significant debt, that may or may not be able to be repaid when things return to normal.
In this economic climate it is critical that small business owners evaluate their situation objectively and leave emotion aside for the health of the company. Following are some steps small business owners can take to ease the impact of a reduction in revenues.
Encourage/suggest attrition
Ask your employees to share the pain
"Bailout" your customers
Hoard your cash
Negotiate with Everyone
Do no wing it
Once the economy rebounds, companies that took action to manage their revenues and expenses against the current market will be in the best position for long-term success.
To see the full version of this article, go to Download HOW TO EASE TO PAIN OF A SMALL BUSINESS LAYOFF
~Bart Eilts - Eilts and Associates 2009
Bart Eilts is the principal owner of Eilts & Associates, a Chicago based tax and business consulting company.
Joe Burke
Your Chicago Mortgage Guy
joe@yourchicagomortgageguy.com
773-742-6707
