Business Owners Urged Not To Cut Staff

Small business owners have been urged to explore different options rather than cutting staff by the Chartered Institute of Personal and Development and the arbitration and conciliation service (Acas).

With cash flow tight for many small firms cutting costs by loosing staff can seem like the best option, but businesses that cut too many staff have been warned that they will damage staff morale and could leave themselves worse off in the long run.

"Many of those organisations that were quick to lay off people in the last recession struggled to meet renewed business demand when the economy picked up again," said John Taylor, chief executive of Acas.

Employers are being advised to offer voluntary redundancy rather than sacking staff, consider pay freezes and look to re-train workers in different areas of their business rather then laying them off.

Source: http://www.newbusiness.co.uk

Survive the Downturn - Review Your Structure & Cost Base

Extract from ICAEW report: 8 Ways To Survive The Downturn

Find out how reviewing the structure of your business can help you survive the downturn and take advantage of the upturn when it comes.

Now is a good time to review the structure of your business critically. Do you have the right business model to see you through the recession and put you in the best possible position to take advantage of the upturn when it comes?

Current economic circumstances may present opportunities and allow you to make changes that were previously difficult or unpalatable. If you need to make savings, examine carefully how you can get the best value out of your business and enable your business to emerge leaner and fitter at the end of the recession.


Think long-term

Avoid making across-the-board or short-term cuts which may damage your business over the long term.

Focus on key areas and activities which are business critical for the future to ensure your business emerges in good shape from the recession. Are there activities you could stop? Is outsourcing, offshoring or relocation a possibility?


Consider spending cuts carefully

Consider carefully before cutting your spend in apparently ‘soft’ areas such as marketing, IT or corporate responsibility. Think about the value of expenditure not just its cost. For example, research shows that in a downturn the winners continue to invest in their brand and build their reputation and profile with their key stakeholders.

It has been well documented that ‘brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times’*.

Consider carefully which products and markets are most valuable to you. How can you reach these markets most effectively? Focus your activities and marketing investment to protect your most valuable markets and customers for the long term.

*John Quelch, Harvard Business School

Source ICAEW - full report can be downloaded by clicking here.