The Ops Authority

38: What to Do Before Cutting Your Team in a Crisis


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The effects of coronavirus are raging all around us, and business owners are feeling the stress. Lots of questions are hanging over our heads, but in times of crisis how do you know what you should do about your team?

 

Over the last week, I’ve received multiple emails and texts from previous clients reaching out and expressing the concern that they have to cut their entire team. I understand... it is a scary, anxious, unnerving time, and they are afraid they won’t be able to generate revenue, or pay their team.  

 

But I want to convey to business owners that this is not the way to go. This episode is all about how this crisis affects your team and the decisions you have to make as a small business owner.

 

Steps For Assessing Your Team In a Crisis

Here is my strategy for how to make responsible decisions when you are feeling the need to cut your team because of this crisis.

 

1. Evaluate Your Cash Reserves

If you've reinvested some money back in your business, see how much you have in your rainy day fund. A majority of you probably don’t have this, and there is no judgement here. But if you do have some cushion, determine your burn rate, which is how long can you continue to pay your current expenses (people, tools, etc.).

 

2. Trim the Fat

 You may have more fat than you’d like, since the economy had been so good over the past decade.  Go through your bank statement and look at every single expense. Make a list of any tool you have been using that you don’t really need; get rid of them or find a cheaper alternative. If you can’t see the value a tool is providing you, cut it. Also, look at subscriptions and recurring costs and evaluate if you need to continue with them.  

 

3. Start Considering Your Teams Costs

If you still don’t have enough cash reserves, you can start to look at your team. Who on your team is adding value, who can’t you live without, and whose hours can you cut?

 

I’d strongly recommend cutting a team member's hours, rather than cutting the position entirely. Also, I don’t believe you should be cutting 10% or 50% across the board. You can’t do this in small businesses, because everybody has a different weight and importance level. 

 

“The closer the person is to the transaction, the more they should be retained.” 

 

If they are further from the transaction, you may want to cut their hours for a little bit of cushion.

 

4. Cutting Staff Entirely

Don’t cut every single teammate. Look at your needs and look at the team objectively. Base your decision on skill and how close they are to transaction. 

 

For example, if you don’t need graphic design right now, you can cut the position. Remember, this doesn’t mean they will never be part of your team again. If you have a small project they could do for you, transition from a retainer to a project based relationship with them. 

 

Create a matrix, and order and prioritize those positions in a ranking style. Consider:

 

  • who is the most critical to your team
  • who is the least critical
  • start at the bottom and cut the person entirely (after you’ve cut their hours and saved a little money). 

 

If you start with #4, you are doing yourself a massive disservice. The reason you got to this point in your business is likely because you were ready to scale, so you grew your team. The way you scale your business is with people. So during times like this when we are pinched from a dollar perspective, we have to figure out how to scale this back.

 

“The only way you can remove yourself from the directing to the leading, is to bring people in to do the work for you.” 

 

If you remove everybody from your business, you will have to go back to the basics. You’ll have to decrease your production level, and decrease your productivity. You can’t do everything… it's impossible to get all those hours in. You can’t do the work of 4 people. 

 

Also, do not forget their expertise:

 

  • They helped you to scale. 
  • They helped you create better systems, and helped you innovate on products, systems and projects.
  • Remember the amount of time it took you to get this team operational. 

 

“You move faster, further by having different points of view.”

 

The economy will come back, but we have zero control when that is going to happen. If this is short term, I don’t want you to burn down the ship. If people are ready to put money in your pocket and you can’t fulfill because you let everybody go, you won’t be able to help as many people.

5. Reduce Your Pay

I want this to be the last resort. You cannot forget that the only person who is going to take care of you is you, and I want you to protect your salary all the way to the very end. If you do have to take a personal pay cut, make sure you stagger it. 

 

“Don’t prioritize reducing your salary before everybody else's.”

 

I want to serve you and help you preserve the business that you’ve built that has provided so much stability for your family. Follow me on Facebook, as I will be going live often to share tips on how you can continue to thrive in these uncertain times.

 

Weekly Ops Activity

Pop into The Ops Insiders Facebook group, and tell me how much money you found in systems and tools that you are not utilizing that you could reinvest back into your business.

 

Other Ways to Connect with Me:
  • Website
  • Private Facebook Community
  • Facebook Page
  • Instagram

This episode was first published at theopsauthority.com/podcast/38.

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The Ops AuthorityBy Natalie Gingrich

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