Downsizing A Business Is Tough, But It Is Possible

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While it may not be the primary reason, an ancillary benefit of expanding your business is so that if the market turns and you struggle to contend with the volume requested of you before, your company can downsize appropriately without necessarily ending operations.

Of course, this logic might sound clinical, but many pathways are when survivability is concerned. For example, larger animals with more bodyfat tend to live longer during the harsh conditions of winter where a lack of food and sustenance becomes a problem, as their body metabolizes the fat before anything else. This is a rather stark example, but it goes to show how principles such as these are often rooted in worthwhile logic that persisted long before the concept of business was ever thought up.

For this reason, downsizing a business as effectively as you can, while tough, can be a redemptive path towards a healthier tomorrow. In this post, we’ll discuss how to achieve exactly that, and what differences your efforts may make.

Employee Support & Transition

Figuring out how to let go of staff can always be a difficult process, especially after they’ve invested so much into your firm. But the truth is that sometimes, this is a challenge that you have to take on.

Of course, there are better and worse ways to go about this. A poor method, of course, is how we saw Elon Musk let go of reams of Twitter staff after his takeover. That’s not to say that letting people go from his new company was unethical, it’s part of business, but unfortunately, severance lawsuits persist to this day and may impact the future of the brand.

It’s essential to implement worthwhile employee support and transition programs. Severance packages as required, making sure you give staff ample notice, and helping them seek further employment (even if that’s just writing them glowing references), can help the difficulty of this news land just a little more easily.

Liquidating Equipment & Assets

Ethically liquidating the assets and inventory you may have access to can be a good way to generate cash for the downsizing, because yes, even downsizing costs money to achieve. For example, using the right provider to sell used medical equipment, transitioning old office furniture you can auction off appropriately, and getting rid of unused inventory is wise.

Of course, this approach also has a secondary goal, that of freeing up space for your possible downsizing effort. If you’re transitioning to smaller offices, having fewer items to put in storage or pay removalists more to shift can be helpful, especially at a time when every penny counts.

Scaling Your Technologies

As you grow your business, you’ll usually scale your operational standards to match them. For example, you might have implemented scaled IT cloud storage and server support as your systems grow. But if you need to scale down, so can some of your IT standards.

That might involve speaking to your managed IT service provider about tweaking your contract or downgrading it to the previous, less expensive option. You may be surprised just how many services can be scaled in the digital age, from cloud storage capabilities to your SEO and content plan. 

If you need to downsize, sometimes, downsizing all manner of supply is the first step.

Clear, Consistent Communications

Downsizing can be a scary time for everyone in your staff. It means that your business will be adjusting itself, be that letting people go, starting to hire consultants or outsourced help more instead of internally hiring, and even moving offices.

It’s important to be very clear about your plans as soon as they’ve been confirmed. Be very proactive and candid about what this will mean for the office and services. It’s also important to be clear about the potential job losses, or by what degree you’re planning to downsize.

Give reasons for the downsizing, and make the decisions you’ve taken transparently as much as possible. Moreover, don’t dismiss staff with concerns or worries, it’s natural for them to be concerned. It’s also better to tell any bad news, like the closing of a department, immediately instead of a will-they, won’t-they aura of concern floating among the staff. Ironically, this approach can help sustain the retention of staff in the interim, because if they know they have time to make plans, they can more easily do so with breathing room, instead of panicking and contributing little ot their jobs before the official leaving date.

Navigating Compliance Measures

Downsizing isn’t just about slashing costs and minimizing your production output. It may change you as a legal entity. For example, you may need to pay different tax rates if your number of hired employees are below a certain level.

It could even mean that you have to submit your official reports to a different regulatory body covering the safety standards of smaller firms compared to multinational businesses. If you’re limiting your exports abroad, for example, this may save you paperwork but it may also require updating your status as a firm.

In other words, regulatory consultants and legal oversight is essential to invest in here. Again, even downsizing costs money, but this can save you a great deal in potential fines or supply woes as you dismantle your business where it can afford to be dismantled.

Folding Departments

The internal structure of your business will change when downsizing, and it’s important to note how you’ll make your company more dynamic, how you’ll cut the fat, and still retain essential services. For example, that might include folding more than one department into one another, such as the payroll department utilities and your HR staff.

Try not to dump a huge amount of new work in the lap of those who’ve been with your firm forever, try and spread it appropriately across the whole team, and integrate agile systems, perhaps such as better software, to help empower staff trying to make sense of these new norms.

With this advice, you’re sure to downsize, even if it’s a tough ask to do so.

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About Dequiana Jackson

Dequiana Jackson, Founder of Inspired Marketing, Inc., helps overachieving women entrepreneurs conquer limiting beliefs and create marketing plans that grow their businesses. This includes one-on-one marketing plan development, digital product creation, web design and content marketing. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog,

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