Estimated reading time: 3 mins
The saying bigger is better gets thrown around quite often, but in many cases, it simply isn’t true. It’s good when your revenue or bank balance grow but you don’t necessarily need the biggest office. If you’re finding it hard to expand your business, it might be time to reassess your priorities. Read on to discover four ways to downsize your business in order to stimulate growth:
Lower your building expenses.
One of the worst profit suckers in almost any business is the cost of the rent. Consider whether you really need that big fancy office or whether you’d be better off in a cozier setting a little further out of town. Appearances do matter but with the rise of serviced offices, you can have your cake and eat it too. Utilizing this type of setup allows you to have smaller overhead costs while still maintaining that high flyer atmosphere for guests and possible business partners and in some cases, they’ll even throw in a receptionist to sweeten the deal. To further capitalize on this, you can give your employees the option to work remotely in order to be able to maintain a smaller workplace or even have your whole staff cohort working from home and completely forgo a physical office if this suits your business model.
Reduce your range.
Every company has a few products that don’t sell well. They sit there in inventory taking up valuable space that could be used for other items until the time comes to dust the cobwebs off every once in a blue moon. If this was the only issue, you might be able to justify keeping them around, but each unsold product should be viewed as money that should be sitting in the bank. Clear out your current inventory (either with a basic sale or as a loss leader) and don’t order any more stock. If you want to keep them available for customers to purchase, make them special order only to guarantee a return on your investment.
Examine your expenses.
In this instance, you want to treat your company budget like a personal one. Go through all your bills for things such as phone and internet connections and any outsourced work, you’ll almost always be able to negotiate a better deal with your current provider or make savings by switching. This is also a great time to see if there are any redundant processes being carried out that can be dropped as this will boost productivity, and, by extension, profits and growth.
Scale back bonus schemes and disproportionately high salaries.
This one won’t be popular with your employees but if you’re trying to promote growth because the business is struggling, you might have to consider it. Commissions and bonus schemes are great incentives to improve productivity when used correctly but if you’re finding it tough to make ends meet, it might be time to temporarily lower what employees receive for excelling. Likewise, your board members and those higher up in company enjoy their large paychecks but if this is no longer viable, giving them a pay cut is better than letting them go because the business can’t afford them anymore.
If done correctly, downsizing your business can have many benefits. Try to avoid making anyone redundant if you can, as this can cause a ripple effect and ultimately destroy employee morale. Those who aren’t pulling their weight will obviously need to be spoken to, but there are alternatives to the traditional trimming of the fat which can have far better results.
