As an entrepreneur or business owner, you are probably aware of the economy’s current state of uncertainty. While some businesses are thriving, others are struggling to keep their doors open and their employees employed. The good news is that there are things you can do to make sure that your own company is weathering these rough economic times as best it can.One of the biggest expenses for any business is the salary of its employees. When the economy takes a downturn and there are fewer jobs available, businesses will often have to offer less pay to attract talent – and that’s something that comes out of your pocket as an employer. Fortunately, there are things you can do as an employer to help reduce those expenses – and keep your business afloat even when times get tough…
This may seem obvious, but it’s important to be careful about hiring new employees when unemployment is high. If there are a lot of people out of work – or even just a few people in every office who are struggling to find work – hiring new employees may not be the best decision. Not only will you have to pay these employees’ salaries, but you’ll also have to help them find new jobs when yours ends.And that’s not all. If the economy continues to struggle, the unemployment rate is likely to remain high for some time. As a result, you might not have any employees to promote to new positions – and you’ll have to maintain the salaries of your existing employees even if you don’t have a new hire who can step in.
You might be tempted to slash employee benefits when times get tough in order to slash employee salaries. This is a mistake. While it may be tempting to reduce benefits like health insurance or retirement plans, doing so in reaction to a tough economy is a bad idea. First of all, many employees rely on these benefits as part of their overall compensation package. When those benefits are cut, they’re less likely to stay with your company.In addition, reducing benefits may actually make it more difficult for you to hire new employees – especially in the case of health insurance. Not only do most health insurance plans require you to cover your full-time employees, but they also set a minimum level of benefits. When you slash benefits, you may not be able to meet this minimum level, which means you won’t be able to hire as many new employees.
This goes hand-in-hand with the advice above. If you’re cutting back on benefits, you may not be able to offer some of the same kinds of benefits that you’re currently providing. For example, if you’re offering a very generous health insurance plan, you might find that it’s too expensive to continue doing so.In this case, you may want to consider reducing the amount of money you’re spending on health insurance while still being able to provide some health benefits. This could mean offering a smaller amount of coverage – or even nothing at all.
Some benefits are negotiated as part of a union contract or other employment agreement. In this case, you may have to sit down and negotiate with the union (or whoever has agreed to these concessions).In a non-union situation, you can still ask your employees to take a pay cut in exchange for concessions. This may sound difficult, but it’s actually fairly easy. You could ask them to forego a raise, or even pay a little more out of their own pockets.In most cases, these concessions will be voluntary. You could also threaten to cut benefits or even lay off some employees if your employees don’t agree to concessions. Again, though, this is a last resort.
The bottom line is that you can’t avoid making some sacrifices during tough economic times. You’ll have to tighten your belt, cut back on expenses, and find new ways to save money. If your employees are ready to do their part, you can help them do more with less – and still get by.If you’re currently in a position to help your employees manage the financial strain of these sacrifices, you’re ahead of the game. And if you’re not – if you’re struggling to make ends meet and can’t spare a single dollar for concessions – then you’ll have to wait until better times come around.