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Labor Force

An expense that many businesses cut when faced with budgetary restraints is employees.  This is rarely a good move.  Replacing staff later will cost even more when you consider training costs.  Although it may become necessary to lay off employees at some point during a recession, it should not be one of the first moves a business takes.  Cutting staff can lead to diminished customer service as well as extended wait time for services.  Instead of firing staff, encourage them to be more invested in your company.  Recognize their achievements and dedication either verbally or financially, when possible.  Even a small reward will encourage your staff to feel like a valuable part of a team and remind employees that everyone is accountable for the success or failure of a company.

"The worst thing you can is to automatically cut back on your staff because they are what keep the business going.  If you can’t give your employees raises or increase benefits, it is essential to keep them happy.  Creative, simple solutions, incentives, and perks to keep them happy such as buying lunch once a month will make your employees feel like part of the family.  Small businesses are like a family and if you continue to make your employees feel like a part of the team, they’ll put their best foot forward, even without an increase in pay or benefits.” – Barbara Voerg, Mid-Hudson SBDC

"Recession is a good time to evaluate your staff and your staffing needs. Do you have the right number of people and do you have the right type of people are questions that need very dry/objective answers. The other issue is, are the people you have performing to their full potential, are they being as effective and efficient as they should be? There is also the issue with management....are you as a manager, providing the proper support to motivate and get the most out of the people you have?  All this implies that one must do some serious and objective analysis before making decisions about personnel. The tendency seems to be to think about reducing the payroll ASAP but that will do little good to the survival of the company if the wrong people remain in the firm or if management fails to utilize all resources effectively.” – Arnaldo Sehwerert, Mid-Hudson SBDC

“Fortunately for our company, we have not been hit (yet) as hard as some other industries with regards to sales.  We have been able to control costs and our debt levels are minimal, allowing us to have a little bit more flexibility than some others.  We have not had to make any cuts in our employees’ salaries but have not paid any increases either.  At this point, our goal is to try to do the little things to make sure that they realize that they are important to our business.  Because there are not a lot of opportunities out there for employees to make changes, they are afraid to give up their current jobs.  As the economy gets stronger, there will be more opportunities and we want to make sure that we don’t lose anyone because they felt they were taken advantage of because of the recession.  We have made every attempt to keep the lines of communication open and encouraged their participation in cost cutting opportunities as well as asked them to keep their eyes and ears open to possible opportunities for new business.  So far our staff seems to be on board with us.  We are attempting to set aside at least some extra funds in hopes that at the end of the year we can give them some additional compensation for their efforts.  We may not be able to give any raises, but even if we can give small bonuses, we are hoping that they will appreciate the gesture.” – Steve Amell, Binghamton SBDC and Small Business Owner


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Recession Survival Guide for Small Business