When a business downsizes, there are many aspects of normal operations that can become disrupted. Even more than scaling up, scaling down can present unique challenges for any business. Here are four of the common obstacles associated with downsizing that all business owners planning to scale down their companies should be aware of.
Meeting Existing Obligations
Even while your company is downsizing, it must continue to meet any remaining obligations that are left over from larger-scale operations. For this reason, it is often wise to downsize bit by bit in order to ensure that essential teams and departments that are needed to fulfill remaining orders stay in place. Once these obligations have been met, you can begin to downsize the business more thoroughly.
Keeping Operations Running Smoothly
Downsizing a business is, by its very nature, a disruptive process. Some parts of your business will need to be reduced, while others may have to be eliminated altogether to conform to your new, smaller business model. Through it all, though, it’s important that the core areas of your business remain intact. It’s also important to keep getting new customer orders, as this will ensure a steady flow of business once you’re past the downsizing phase.
Moving Into a New Location
In most cases, downsizing will involve physically moving your business to a smaller headquarters. Dedicating your company’s staff and resources to the move can shut down business operations for several days, making it a generally poor idea. Hiring a moving company is usually a better way to go about the move, since it will leave your teams in place to tend to essential business functions while your new place of business is being prepared.
Downsizing Your Staff
As a business owner, reducing your staff is apt to be the most difficult part of downsizing your company. Letting go of competent, valuable workers in the interest of reducing the size of the company is unfortunately necessary, but making the decisions about who goes and who stays will be difficult at best. To ease the burden on the employees who are eliminated during the downsizing process, be sure to offer whatever severance benefits you can and provide good letters of recommendation for future employers. If you know have contacts in other businesses that you think could use your former employees, you can also offer some job placement assistance.
These are just four of the many obstacles that a business faces when downsizing. The good news is, though, that once you’re through the downsizing process, your business will be easier to run.