Understanding How Consultants Help Startup Company Owners

3 Reasons Small Businesses Need A Consultant To Help Them With Downsizing

4 March 2021 by Byron Johnston

While downsizing is difficult for any business to handle, it's especially difficult for small businesses. When you don't have many employees to begin with, the termination of a few employees can massively change the way that your business operates. However, downsizing is sometimes necessary to reduce expenses or to eliminate employees who are not productive. Since downsizing is difficult for small businesses to handle, it's a good idea to bring in third-party help to aid you with the process. A small business consulting service can provide you with a neutral perspective and help you decide which employees you should terminate. If you're thinking about downsizing, read on to find out three reasons why it's best to hire a consultant for help.

1. Helps You Decide if Downsizing Is the Right Decision

Although you may have decided on your own that downsizing is the right choice for your business, it may be avoidable. Terminating employees should generally be the last resort when you're trying to reduce expenses. Even though salary is a large expense for any business, terminating employees has the potential to reduce revenue and hamper future growth. This is especially true when the employee is skilled and has been working with your company for a long period of time.

Before starting the process of downsizing, a small business consulting service will first determine if it's the right move for your company. Other ways to cut expenses, such as switching inventory suppliers or reducing hours, should be considered before terminating any employee. A small business consulting service will also weigh the potential cost of downsizing versus the savings in order to determine if it's a good business decision.

2. Views Employees Objectively

When downsizing is the right option for your business, a small business consulting service will make sure that it's done according to objective measures. For these companies, it's common for employees to develop close relationships with one another. As such, it can be difficult for managers to fire employees that they're friends with outside of work. On the other hand, managers may also be more tempted to fire employees that they personally dislike. This subjectivity can interfere with downsizing correctly, as effective downsizing needs to be restricted to only objective measurements of performance.

A small business consulting service will consider performance reviews, complaints, and warnings given to the employee in order to gauge how much they're contributing to your company. Relying solely on objective measures means that you have a better chance of terminating employees who are truly unproductive.

3. Avoids Hurting Employee Morale

Finally, outsourcing your termination decisions to a third-party business consultant can avoid damaging the morale of your other employees. Using a consultant for the downsizing process allows you to avoid suspicions of favoritism, as this can quickly ruin the morale and productivity of the remaining employees.

If your small business is considering downsizing its workforce, contact a small business consulting service before you begin the process. A consultant can give you an insight about whether or not downsizing is the right option for cutting expenses, and they can help you make the right choices in which employees to let go in order to reduce the effect that downsizing will have on your productivity.

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