Three Ways SMBs Can Survive the Economic Meltdown

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Stocks are plummeting. Banks are failing. The money’s all gone.

If you’re a small or medium-size business owner with employees, I’m going to tell you something you already know: Layoffs are coming, too.

You’ve got hard choices ahead. Obviously, nobody knows your business better than you do. But I would like to offer one small suggestion: To the greatest extent possible, factor in what new technology makes possible. Gravitate toward using technology to cut the costs associated with existing employees, rather than just cutting costs by laying off people.

The knee-jerk impulse to lay off half your staff in order to cut employee costs by 50% can be just some antiquated institutional habit. Technology enables all kinds of desirable alternatives to letting people go.

Here are three ways to use new technology to dramatically cut costs — with minimal or even zero layoffs.

1. Send people home

It costs your employees real money to show up for work. You pay employees a salary, and from that salary they pay all costs associated with coming to work.

Gas, wear-and-tear on the car, dry cleaning bills, restaurant lunches and more. And it takes time — and time is money to your employees.

Instead, consider reducing the pay of some employees by some amount — say, 10% — and having them work from home. Your costs will be lower, most employees will be happier, and you can hang on to all your people.

A transition to telecommuting can be done incrementally. Some government agencies moved to work-at-home Fridays when the price of gas shot up recently. That’s a good way to go if you’re concerned about the cultural or moral issues. Gradual transitions give employees time to get used to working from home before they’re doing it full-time.

2. Travel virtually, rather than actually

Face-to-face meetings are superior to online meetings. But when they come at the expense of staff, it’s time to rethink how faraway meetings are conducted. Airfare (with high fuel costs), hotels, restaurant meals, taxi fares — it all adds up to hundreds or thousands of dollars for every business trip.

It’s probably better to have more meetings over video conferencing using any of dozens of powerful online tools for remote-control presentations and online meetings. My favorite online meeting tools are part of the Zoho online productivity suite of applications. Zoho Meeting handles meeting invitations, chat during meetings, remote presentations and other features.

3. Close your office

Depending on the kind of company you have, it’s possible to reduce your office space dramatically, consolidate multiple offices into one, or even get rid of office space altogether.

Some Silicon Valley startups are doing this. The idea is that everyone telecommutes, and you hold meetings at industry conferences, in coffee houses or in rented meeting space. It’s a radical step, but it eliminates the astronomical costs of office space and frees up that money to pay salaries.

If this sounds too radical, try penciling in the cost of leasing office space, the insurance, utility bills, rental or leasing of office equipment like printers, the phone system — coffee, for crying out loud. Then compare that annual cost against the salaries and associated costs for each employee.

Instead of paying those astronomical office-related costs, you can have employees divide their time working in spaces already paid for — their home offices, or the local Starbucks. Provide each employee with a good laptop, cell phone and low-cost all-in-one printer/fax for the home office.

It’s called Bedouinism, and it’s a cultural shift that occurred in the valley after the dot-com bubble burst eight years ago. Suddenly, startups were forced to live within their means, and had to reach break-even much sooner than before. Faced with a choice between people and infrastructure, some companies chose people.

You’ve heard most of these ideas before, and probably dismissed them as undesirable. But economic meltdowns have a funny way of refocusing priorities and making once-unthinkable changes suddenly appealing.

Make no mistake: These actions are drastic transformations. But so is laying off people. After all, it’s your staff that does the work, not the office.

Besides, your employees may already be comfortable with all of this. It’s become common in recent years for people to do work after hours and on weekends from their home offices, and to choose to work at coffee shops and so on. And, of course, we’ve all been on meetings that involve conference calls, video-conferencing and remote online presentations.

All these ideas simply take what’s happening occasionally, and going full time with it. Maybe they’re not so radical after all.