Lessons you’ll learn when downsizing your business

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By Henry Brown

Businesses are always looking for new ways and ideas to develop, expand, and capitalize on new markets. This is one of the key components to running a business; you want it to grow and become successful. However, it does not always work out as planned, and portions of the business ultimately become unprofitable.

In this case, it’s time to think about downsizing the business itself, taking away the elements that just aren’t working. Once this is done, either you can start to grow again in a new direction or keep things smaller if that’s more comfortable for you.

Downsizing is a kind of exit plan for your business. It’s what you do when you discover you can’t grow as quickly as you’d want and need to make some changes to ensure that you can continue operating at least in some capacity. Read on to find out what kinds of lessons you’ll learn when you take this step to downsize your business.

You should get help with your plans 

Downsizing, like development, often requires the assistance of outside experts. You need expert guidance on which aspects of your company to leave and where to direct your remaining resources. This could mean shutting down some physical branches, selling off stock and equipment such as concrete tape and vehicles.

Remember that the decision is not always obvious. Choosing a specific course of action is very difficult, and even experienced managers make mistakes; it’s even harder when you have an emotional interest in your business. For example, you may be considering closing an underperforming website. However, that specific outlet may be in a growing area and could produce significant income in the future. An expert would help you see this and ensure you don’t make an error.

You should look at previous downsizing case studies

Downsizing is something that many businesses have done throughout the years. Recessions make it necessary at times, or there are technological developments beyond their control that compel companies to cut down their activities. It could just be that the owner wants to slow down somewhat yet still keep working. There are many different reasons.

In any event, reflecting on past instances and learning from them may be helpful. General Motors, for example, cut off 50,000 workers and shut down numerous facilities in 2009. However, it is still running strong today, despite receiving little government assistance. This just goes to show that, when approached in the right way, downsizing can be the best option and a successful one too.

You should investigate legal consequences

Companies establish contracts with their clients as part of their normal operations and are obligated to fulfill their half of the bargain. However, if you downsize, you may not be able to finish projects according to the conditions outlined in your contracts, resulting in legal problems.

As a result, experienced managers must attempt to reduce these problems while keeping one eye on their responsibilities. Before making major organizational changes, they need to ensure that all contracts can be met.

Henry Brown is an online marketing executive. When he isn’t talking shop, he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.

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