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Staying Small

Staying Small

Good things come in small packages – or so that’s how the old saying goes. But if ‘bigger is better’ which should we choose?

When it comes to running your business, no one way is correct.

Yet, the business community is under the impression that growth and speed equals success – despite two-thirds of the fastest-growing businesses ending in failure. So, why does society risk this boom and bust cycle, rather than striving for a small and lean business?

Here we discuss some of the key pros and cons of keeping your business small to help you assess whether a slender approach is right for you.

 

Less Overheads (More Time)

It’s no big secret that staying small means businesses can unlock significantly lower overheads than their larger-counterparts, with savings on costs such as:

  • Office space
  • Expenses
  • Resources

In fact, research from Llyods Bank suggests that, due to a reliance on informal sources, small businesses can continue to save significantly – replacing the financial costs associated with accountants and support services with business advice and favours from friends, relatives and former colleagues.

With significantly reduced overheads and the negated requirement for expensive loans or investors, it is perhaps no surprise that most small businesses start turning a profit by year two with efficiency and their lean structure to thank.

However, for what you save in overheads, you may be paying back in time.

On average, small business owners put in 75 extra days per year than the general workforce. In fact, a whopping 39% of small business owners admitted to habitually working over 60 hours a week.

So, if time is money, where do we draw the line?

 

High Control (High Stress)

Large companies often have thousands of employees in a number of offices – separated by time difference, distance and culture. However, with a small business, this is much less likely, increasing your ability for control.

By controlling all elements of your business, such as overseeing departments, a holistic approach can be applied to business. This may aid you in making informed decisions such as how and where your business operates and give you the ability to take a strategic focus.

However, the dark side to this ability to take control is an inability to switch off.

As a small business owner, you are the business. If you don’t deal with a problem, no one will. So how can you take a break?

Being a small business owner can be a big burden to bear alone. Failure to delegate can lead to overworking and feelings of overwhelm and stress.

On average, small business owners only take two weeks holiday per year – with 81% reporting that they make or return business calls during this time. So, is this an indication that small business owners struggle to relax or is it because they love their job?

You may be surprised to learn that smaller organisations are the happiest at work – with many owners stating that they ‘love’ their job and would do it if money were no object. That said, being a small business owner will still have a significant effect on your lifestyle.

 

Ability to Adapt

With size comes cumbersome red tape that slows down a business’ ability to adapt.

  • Paperwork
  • Processes
  • Hierarchy
  • Slow sign-off

These are just some of the reasons why staying small can help businesses be more nimble, adaptable and agile –positioning them perfectly to respond to change.

We have seen this recently, with the global pandemic taking the world by shock. Many small businesses quickly snapped back into action – moving operations online, changing their offering or even pivoting to take their business in a new direction. This is an unrivalled benefit that large businesses struggle to replicate well.

However, evidence shows that small businesses are less likely to take out loans, with female business owners being particularly frugal with their money. Due to this risk-adversity, although the business is set up with the strategic flexibility to adapt, a lack of resource may hinder this in action.

 

Happy Environment (Harder Cuts)

Instead of feeling like silos scattered with seas and sands between them, small businesses can enjoy the benefits of being one, happy team.

A study by LinkedIn found that employees working for small businesses created the most positive working environments, with 77% of employees reporting that they would recommend their employer to a friend. This is for a number of reasons:

  • Higher control over the work process
  • Sense of belonging
  • Social relationships
  • Higher job satisfaction
  • Opportunities for development
  • Ownership of their work

And, with increased productivity being a result of so many of these factors, the argument for staying small is strong. But what’s the drawback?

According to Duréndez et al, small businesses have less formal management, control measures and processes in place – often relying on a single figure-head to make decisions. In small businesses, it was found that close social relationships, for example, friends or family influences, may cause leaders to make bad business decisions, such as keeping deadwood.

In light of the last few months, it leads us to consider whether small businesses will fail due to their increased loyalty and inability to make the tough cuts that may be required to survive. We urge business owners not to make this mistake and to, instead, reframe smaller businesses as a lean and favourable option that sits on the table.

 

Is staying small right for you?

The answer – it depends on you.

Just remember, a smaller, more lean business doesn’t have to be a back step. It can provide a number of great benefits that make your business a more profitable, productive and enjoyable place to work.

Restructuring your business can feel like an overwhelming task. However, right now, many businesses are being forced down this route in a bid for survival.

During these testing times, the team at Crosse HR are trying to do their bit – supporting small businesses by providing free templates to help time and resources go further.

Download our free restructuring toolkit here and take your first step towards a smaller, leaner business.

 

 

Staying Lean, Not Mean

Staying Lean, Not Mean

Businesses are facing many challenges right now as they seek to recover from the shock of the pandemic, recover as best possible and plan for rocky tides that lie ahead. However, perhaps one of the most pressing challenges for businesses post-lockdown is about being lean but not mean.

 

What am I trying to say?

 

I am talking about balancing cashflow and the affordability to resource with customer and employee satisfaction.

Many business owners have had staff on furlough and are trying to get the timing right in bringing those staff back to work, whilst others are debating how much temporary resource they might need and when.

 

How does this impact Customer Satisfaction and Employee well-being?

 

Two examples I have seen this week…

 

Customer satisfaction

I am currently going through a house purchase. Our buyer changed solicitor mid-way through the process as the firm had furloughed so many people, he couldn’t get the service he needed.

 

Employee well-being:

A client of ours was telling us about her husband who is being asked to carry the work of his department of three; to achieve this, he’s having to work twelve-hour days to keep up. The firm can then maximise their use of the furlough scheme.

In both of these examples, the firms are clearly trying their best to manage cash to preserve their future.

However, the outcome is not good for the business with the first example meaning the solicitor lost the work. In the second, the employee, who is already drained after everything we have all gone through in the last few months, due to worries about job security, is sadly expected to accept this increased workload.

 

What can you do to get it right?

 

Plan, plan, plan

Of course, no-one knows what the future holds right now and what the recovery will look like, but you still need to try. Doing so will help to estimate the optimum time at which you will need more resource. My advice; –

  1. Make your best estimate on what income will look like
  2. Assess the staffing capacity you need to service this well
  3. Understand the trigger points in advance on when you need to bring the additional resource into service customers and ensure employee well-being.

 

Consider Capacity requirements

If you have used the furlough scheme, take advantage of its flexible nature. Remember, you can bring people back on any working pattern now so assess what is right for you.

Consider: is it more efficient to bring people back for one day and get everything done for the week ahead or is a few hours per day more appropriate?

If you use any temporary or outsourced resources, talk to them. Make the situation collaborative and discuss what you need, try to be flexible to ensure they can perhaps top up with work from other sources.

 

Cashflow

Once you’ve looked at what income you might get, and the resource required then look at your cashflow.

  • What does that mean for you as a business?
  • Do you need additional funding to get you through the next few months?

 

The balancing act

 

It is very hard being a business owner right now.

We are all trying to manage cashflow as best we can in uncertain times. A little bit of planning will ensure you can look after your employees, your client and your bank balance.

Be lean but don’t be mean.

 

About Helen Fleet

 

Helen Fleet of HF Financial Strategy works as a Finance Director and guides companies in delivering their financial and business objectives. These can include cashflow planning, pricing reviews and ways to improve profitability.

Follow Helen on LinkedIn here.

 

 

Restructuring Toolkit

Restructuring Toolkit

We decided, as part of the Coming back from Covid series, to give you a quick guide to restructuring.

Whether you are just moving the chairs around the room or making people redundant, our Restructuring Toolkit should provide you a great place to make a start.

We’ve included some templates to help you along – helping you make the most out of your limited time and budget at this difficult time. We sincerely hope that it helps with this difficult time ahead.

Restructuring Toolkit - COVID19 HR Pack

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Change is Gonna Come

Change is Gonna Come

To quote the title of a famous Sam Cooke song, one of the many consequences of the lockdown is that we have all had plenty of time to think, ruminate and ponder about our lives. For us business owners, this time of reflection has extended to include our businesses.

As a result, many may well be facing the prospect of changing their business to adapt to the changing times – be it out of necessity or because you have finally had the time required to get your house and business in order and consider the future.

In short, whether we like it or not ‘A change is gonna come’.

 

Restructuring Your Business

Whether a restructure is a choice or your only option, it can feel like a pretty overwhelming task to approach alone… So, where should you begin?

Below, we share some of the common questions we get asked about restructures and provide clarity to help you on your way.

 

“Can I just ‘do it’?”

Yes, you can. However, we recommend getting a restructure plan in place first.

This doesn’t have to be anything fancy or a scary task. Just write out your rationale for doing it, the consequences it will have, the timeline for carrying it out and the process that you will follow.

Doing so will help you gather your thoughts and put some structure around it, so that you can communicate it to your staff.

“What is consultation?”

Consultation is borne out of Information and Consultation Directive, where employers are obliged to consult with employees on any aspect that will affect their employment.

Before you moan, you really should do it!

However, be sure not to confuse consultation with negotiation. Whilst you should take on board your employees’ views about the restructure, you are under no obligation to actually implement those views.

“Do I have to consult?”

Yes, because failure to consult can cost you.

An employment tribunal can award a penalty for failure to consult. And, in the case of TUPE (Transfer of Undertakings – Protection of Employment Regulations), that award is 13 week’s salary.

“How long should consultation last?”

There are no hard and fast rules if your business has less than 20 employees. However, it should be no less than a week and as much time as possible.

“Can I use Last In, First Out?”

We’re telling you now – no you can’t. We’re not sure where the LIFO philosophy came from but forget you ever heard of it.

“Does furlough cover redundancy?”

The short answer is no.

If you are looking to end furlough to make your employees redundant, seek further support or contact us.

“What is selection criteria?”

Selection criteria is the basis by which you will select employees for redundancy.

The criteria can be based on attendance, performance, disciplinary, experience and qualifications to name but a few. Some businesses choose to base this on a competitive recruitment process.

 

Helping You Restructure

We decided, as part of the Coming back from Covid series, to give you a quick guide to restructuring.

Whether you are just moving the chairs around the room or making people redundant, our Restructuring Toolkit should provide you a great place to make a start.

As we are a generous lot here at CrosseHR, we’ve also included a few templates to help you along – helping you make the most out of your limited time and budget at this difficult time.

And remember, if you need any further help with your restructure or any HR concerns, we are just a phone call away: 0330 555 139.

 

What’s included in our Restructuring Toolkit?

 

Our restructuring toolkit is free to download here. Included within it is:

  • Restructure business plan template
  • General guide to redundancy and the redundancy procedure
  • Consultation invitation letter template
  • Template for recording individual consultations
  • Letter template to inform employees they are ‘at risk’
  • Formal redundancy notice template

 

You can download it for free here.