When cutting costs means axing your friends
Small businesses in a cash crunch can face tough choices: Let employees go or risk the company. How is your business staffing?
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When your having trouble with employees, look first to what you contribute to the situation. You seem very angry. Of course you need to be a leader (NOT a boss) that people respect and will follow, but you don’t have to be the enemy.
I don’t have to be buddies with my employees, I have to have to respect them as struggling and giving all they can to my company. It is by their efforts that I will succeed or not. I could fire them all, but realistically, I can’t replace them. I first of all, don’t have the expertise (that is after-all why I hired them to begin with) and I don’t have enough hours in the day.
I took a pay-cut that equals the lowest paying employee. For some, I let them work from home so they could save transportation costs. I got creative!
I coach a lot of business owners at beingthebest.ca and we have have many creative ways to have the companies keep going and not fire unless it is the last resort.
We are an e-commerce based fashion company, manufacturers, wholesalers/retailers. After 5 years of growth starting as a home business we hit a plateau in 2006, in 2007 we thought we might be doing something wrong and we starting pushing really hard, with more marketing, sales people and getting into debt to support an operation that wasn’t profitable anymore. In 2008 we realized it didn’t matter how hard we tried, the market wasn’t there, and we started cutting back. One year ago we were 15 people, now we are down to 5. Last year we had 2 Mill of gross revenue, this year we’ll be around 1.3. At this point we are just fighting for survival. I haven’t had a paycheck for most than a year, and I work every single day of the week, trying to cover for the marketing, IT, sales and customer service people we had to lay off.
Very hard times… I am just wondering if we have hit the bottom already, I am not sure if we could survive if things get much worse than this. We have been at the edge of the cliff almost on a daily basis during the summer, I thought we would end up losing everything and shutting down the business and see our whole life crumble completely. At the last minute, we end up getting one of this high-interest loans where they get a 10% of your credit card merchant account income (and you pay a 20% interest) and that gave us a breather that together with our last lay offs is allowing us to get through the 4th quarter so far..during my hardest times, what helped me most was reading and re-reading The Power of Positive Thinking by Norman Vincent Peale and letting God into my life.
An Employer HAS no friends!
I learned the hard way when starting my own business that you can’t treat employees as your buddies. They will not respect you.
Whe I was an employee, I thought that when I started MY business, we would have a friendly, collegial atmosphere and that I would pay my employees well and they would reward me with high productivity.
WRONG! Most companies treat the bosses like rock stars or temple priests – often cordening them off in a special section of the building. Psychologically, it is better if the bosses are viewed as demi-Gods by the plebe employees.
If your employees see you as one of “them” they treat you as a peer and walk all over you. They will not work harder, and if you pay them MORE, ironically they resent you more.
The reasons are complex and psychological. But the bottom line is that you are not the “friend” of your employees and once you go down that road, you are in big trouble.
Layoffs are only the half of it. Tey will ask you to leave early, for extra vacation, to co-sign their car loans, to borrow money “until payday”, etc. And they won’t take your supervision of their (lack of) work seriously.
Everyone says they “despise” their old “evil bosses” who were mean and draconian. But what I found is that they also RESPECTED those bosses, and even after they leave a company like that, they would revere and respect those bosses.
Employees have so many protections under the law, and employers very few. It is VERY EXPENSIVE to hire someone in a small business. Just doing payroll is pricey and time consuming. If, on top of that, they don’t work very hard, a small business can quickly go under.
Don’t try to be “friends” to your employess, and for God’s sake, don’t HIRE your friends to work for you!
We need to make it easier to hire AND FIRE employees in this country in order to encourage people to hire more. Right now, the only way you can let someone go is to go out of business and lay everyone off.
I live in Australia and own a real estate firm of 30 people. Reading your stories has crytalised my position here in OZ. We are experiencing the same economic climate albeit the severity is probably a year or two behind the US. We are significantly reducing staff numbers and this is a theme across all industries throughout our country. It certainly won’t be a Merry Christmas at our firm.
We have been cutting WAY BACK for the last 4 years! We no longer purchase any equipment or assets. My wife and I figured it out long ago, that all we we’re doing was allowing ourselves to be made fools of PRODUCING! We have plenty of work but turn it away…. enough to provide 10 to 15 PLUS JOBS…..It’s not WORTH IT! We cannot charge ENOUGH to overcome all of the EXPENSES and do the job RIGHT!!!! with pride of workmenship and provide REAL value! in a nut shell, we are NOT going to SCREW people to make money by CHEATING THEM!
Taking ALL of the RISK doing ALL of the work & and the Gov’t walking off with most OUR labors!
After realising that We we’re being CHEATED by ‘uncle Sam’ and played for fooools, we went on a rampage got out of total debt and now we take it real easy I work ( I am 52 years old) one or two days a week now…if even that! why should I/WE do any more than that??? Today if you PRODUCE for ameriKA your taken to the cleaners & made a fool of!! pure and real SIMPLE
We ,and you the reader of this, PAY: 30 % PLUS in federal tax even MORE with alt min tax, 15 % in FICA, then another 6 % (MORE in some states) in state income tax! Then another 8 % in the various ‘hidden’ and not so ‘hidden’ taxes such as FUTA,SUTA, Use taxes, Sales taxes on asset purchases,sales taxes on asset repairs, Fuel taxes, various regulatory fees and permitting fees then various business tax’s, property taxes,on and on…. you name it the Gov’t money GRAB is in there!
That almost 60 % folks DO THE MATH and see for yourself! your paying it you may not see it but it’s THERE!!!! think about it! you will SEE IT & be SHOCKED!
So now uncle Sam can find some other SUCKER to pay for all of HIS CRAP!
Thanks for your time I am going DEER hunting today and for the rest of the month. producing only enough for my wife & I now!…can’t wait untill Turkey season is open gobble gobble!!!
Cheers fellow % former PRODUCERS
!
WAS 115 EMPLOYEES IN ‘07….NOW DOWN TO 85, AND WILL HAVE TO LAY OFF 12 MORE,,WITH THE THREAT OF HIGHER TAXES AND FREE HEALTH BENEFITS …..AND CLASS WARFARE BY OUR NEW GOV’T….IT’LL CERTAINLY BE AN INTERESTING 2009…
HERE COMES SOCIALISM IN AMERICA
Ours is a family real estate business in the Washington DC area. Most of the folks that work here are independent contractors because they are licensed agents. However- we had 2 that were paid employees. Last year we had to let go one of the two and she had worked here over 5 years. Last month we had to let go and excellent employee and more than that a really good family friend. That was one of the worst days of my life. But we are still here as we watch others in this business close thier doors and I hope that better days will come where these folks can come back…..
We need $5 million dollars to get us through next year but unable to find investors so our company is shutting down. We have about 20 employees mostly programmers\developers, QA and technical support.
The Surgeon I work for has cutback office hours twice this year. With the looming thought of more taxes our office will only open five days a month. That means for the two full time employees cut back to five days a month and two part time employees will lose thier jobs. All this in a effort to reduce thier tax load should the new administration raises taxes on small business.
I am now looking for a new job in a bad job market. The outlook here is grim, and depressing.
I am a small business. Been in the same place for 24 years. Owned this place for 2 years now. Had 9 employees. 6 f/t with myself and 3 p/t. I have had to lay off 4 f/t employees. It stinks. 4 families now without their income stream. Have no choice and am working harder than ever to try to turn this around. I feel terrible about my employees. I have gone without a paycheck for months on end to salvage things and waiting for a turn around, but all the bad news in the press and the irresponsible politics going on it is impossible to get positivity going and in a retail environment it is very hard. It is no wonder so many retailers are suffering. With doom and gloom and demanding customers and less employees because there is no money… what do customers expect!? We are in trouble. Just below someone complains of Walmart, but is not the smart company the one that protects itself and makes sure it is profitable? I don’t like them at all, but I don’t hate them in that way… I just hate what they do to the little people like me, but still.. it is the general public that makes them so big because in the end, we are the ones shopping there… Is it the end of capitalism as we knew it… I think so. The Death of the American Dream I think… unless you’re a lawyer.
Feeling very bad about having to lay off two employees today. we just bought our business last sept. but infact we are here for the business. i must make this thing work. it is for me and my family. trust me i will not sleep tonight. when we have the need we will then and only then consider adding any more employees. looks like my 30th birthday will be at work this year!
Better days coming.
these are two great people. i hope that they can rejoin us at a later day.
Small businesses let people go because revenues are down, not because credit is tight or taxes.
As I see it, the Republican mantra that cutting taxes for small business will create jobs is way off the mark… I run a small business and the only reason I know of to hire someone is to make my company more profitable. If it makes sense to hire someone, I will reduce my profit (temporarily) to hire them. Within a month or two they should be making a profit for the company, so the cost is really minimal in terms of my profit.
The idea that cutting my personal taxes will cause me to now spend that money to hire someone is crazy. I do not hire people because I have extra money! Small businesses only hire people when they have a clear benefit – not when the owners have extra cash.
I was the EHS Engineer at a fairly good size, (~100 employees) electroplating company. I as well as the HR manager and a senior QA person were let go in Sept. We all had at least 20+ years at the facility. My wife is still employed there and has seen her responsibilities grow as the remaining office staff try to compensate for the missing staff. It will be next to impossible to replace the experience lost in that move, but it will hopefully mean the continued existence of the company. I’m not happy, but I’m a realist and am grateful that my wife will be employed and we will continue to have insurance.
being in printed circuits for 30 years we see absenti lazy rude bad attitude no follow rules employees gone backstabbing teamleaders gone gone gone now since 1976 we have a team of electropac employees long we truly are survivors in printed circuits thanks to our founder/ceo raymond boissoneau
Yes, we had to cut one position. We’re a plumbing, heating and air conditioning company of 23 years and employ 30. It was hard to cut even the one position as he was a friend and great guy with kids in his 50’s. Very sad. I held on to him for 2 years after we lost a large contract we had but with business getting slower and credit tighter I was forced to make a decision, risk the entire company of let one go. I pray nobody else will need to be laid off.
Large companies are also at high risk…probably more so than small biz b/c of greedy board members and stagoring payrolls. I heard that Walmart is going to announce major layoffs. Imagine that! they have major cash flow but senior managment and board members will not sacrafice high profit margins. Instead, they’ll cut the very folks that helped them grow to where they are today. Its a principle business decision that, unfortunately, effects everyone regardless of the size of the biz.
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work for a small 6 person architecture firm. projects have disappeared. we are all facing unemployment unless we get a project or two in the next few weeks. our line of credit was cut in half this month hastening our failure. the worst part is that if/when we lose our jobs the market is so flooded with other architects who have been laid off that there are absolutely no jobs any where. one or two might pop up here or there but when you have 100 – 175 people vying for 1 job times are dire. I went to school to be an architect as it is a passion of mine, the same can be said about peers of mine but I have heard a lot of them talk about leaving the proffesion all together as the architecture profession sees this type of layoff every 5-8 years.