Downsizing can be done for a variety of reasons. It can help some businesses cut their costs and get lean when they need to maximize profit. It may allow you to adapt to a remote working setup that is becoming more and more popular. It can even help save the business in times of crisis.
However, downsizing isn’t just throwing everything out and bundling into a smaller space. It should be a planned and considered move, as when done poorly, it can leave you lacking some of the very resources you need to survive as a business. Here, we’re going to look at tips that can help you shape your approach to downsizing.
1. Address your staffing needs first
Downsizing can be tough on both you and your team. You may find that not all of them are going to be able to come with you. Unfortunately, letting employees go is a part of business, and you should have a system in place to help you do it in a way that is clear and concise and makes their transition as smooth as possible. This includes giving them as much notice as you can, ensuring you have severance packages, and being ready to write them references or otherwise help them transition into a new place of employment.
While giving your staff support while you lay them off won’t change the reality of the situation, it can make sure that you don’t burn any bridges. Most importantly, it demonstrates a level of care and investment to the staff that you’re keeping on.
2. What to do with the extra stock you have
When downsizing, there are likely to be assets and inventory that you’re not going to be able to take with you to your new office. For some of your equipment, you might want to look at who you can sell it to, such as second-hand office furniture stores. Some inventory might be simply easier to get rid of, and you should ensure you do it ethically and sustainably if so. Otherwise, you might find that self storage units can offer you temporary space to hold onto them. If you're unsure about space, consider researching what size storage unit do I need to rent to accommodate your items. As such, you might be able to reintegrate certain assets or sell that inventory a little down the line, rather than getting rid of it.
3. Consider your tech needs as well
When your business grows into a bigger space, you might need to invest in IT infrastructure like server support and additional security. The opposite can go as you move into a smaller space, as well. As such, you should work with a managed IT team that can help you scale your setup in either way. They might be able to help you sell off some old tech equipment, or move things into more easily-scalable digital models like cloud server storage.
4. Ensure clear communication all the way through
When you’re downsizing, you’re likely to make decisions that will affect your staff. Not only does this mean changing the location, but letting people go, restructuring departments, and hiring outsourced help all demands that you keep your team in the loop. The sooner you can let them know about any news that’s going to affect them, the better.
You also have to consider your customers. If you’re downsizing or moving, then it may affect them, too. To keep your customers happy, it’s best to let them know about any downtime or potential changes to the services they experience, as well. You don’t have to give them every explanation, but keeping them in the loop can help them feel less blindsided while they wait for things to get operational again.
5. Be mindful of your legal needs
The legal needs of the business, and even its legal status may change in a number of ways during a downsize. You might want to move from a partnership to a sole proprietorship or a limited liability company, for instance. Tax needs might change if you have fewer employees than you did beforehand. Depending on where you move and what duties you outsource, there may be new regulatory needs for your business to meet. As such, you might want to get a business lawyer working on your side during the transition.
With the help of the advice above, you can hopefully make downsizing a lot less complex and difficult than it needs to be. There’s always going to be a little friction to any major change in the business, but as long as you stay prepared and flexible, you should be able to handle it without too much strife.
Here’s the 6th header and content about the need to potentially move locations when downsizing your business, focusing on cost efficiency:
6. Relocating to a smaller space when downsizing
When downsizing, it may become necessary to relocate your business to a smaller and more cost-effective space. Moving to a smaller office or even transitioning to a co-working space can help you cut down on rent and utility costs, which can be a significant financial relief. However, moving itself comes with its own costs, and managing them efficiently is crucial.
To ensure a cost-efficient move, begin by researching potential locations that not only meet your new size requirements but also align with your long-term business goals. Negotiate leases with flexibility in mind, in case further downsizing or scaling up is necessary. Work with professional moving services that specialize in corporate downsizing to handle your equipment and office furniture, and consider selling or donating unneeded items to offset moving expenses.
Unless you want to do it all by yourself, you'll need to get support from a moving company. Additionally, look into timing your move to avoid peak moving seasons and secure better rates from moving companies. Finally, plan the logistics carefully to minimize downtime, ensuring a smooth transition to your new location without disrupting your operations or customer service.