How to Avoid Layoffs in Your Small Business

Layoffs are hurtful to everyone involved. Dedicated employees lose their jobs and employers have to let go of people they respect.

For a small business layoffs can be tragic, yet it may often seem necessary to keep a realistic budget. “For most small businesses, personnel-related costs are among the most significant, and with sales remaining flat at many businesses, it’s tempting to look to layoffs as a way to cut costs,” according to comments from

With mass layoffs falling in 2010 from the year before, The Bureau of Labor Statistics reports that they were still common throughout every industry.  In 2010 there were 7,247 company layoffs. The fourth quarter alone ended in the termination of 295,571 employees.

With layoff numbers still lingering at an alarmingly high rate, small businesses have begun to look at various other options.

Although layoffs can bring costs down in the immediate moment, the price of rehiring when the economy inevitably comes back are overseen. The cost to hire and train is, in itself, enough to find a better solution.

Include Employees in Layoff Alternatives

Many small businesses become a family, and companies have been cutting every possible cost before pink slipping a valued employee. The benefit of a smaller business is that there are various ways you can keep layoffs at bay, and still keep invaluable workers:

  • Be honest with your employees. Share with them the reality of the business’s financial burdens. Employees will often work harder when they can see the black and white bottom line.
  • Present your employees with alternatives to layoffs. This is a creative way to keep your important employees and ease nervous tension within the group. SEI Industries faced possible layoffs, but allowed their employees to vote on how to avoid this. As a group, they decided to go down to a four day work week. Everyone was able to keep their job, and cut costs at the same time, according to Avoiding Small Business Layoffs.
  • Involve your employees in brainstorming more creative resolutions to layoffs.  Allowing people that you trust present valid ideas for cutting costs can keep morale high within the office, and bring more solutions to the table.
  • As the CEO of your business, consider asking yourself and upper management to take a pay cut, or forgo bonuses. If only temporarily, this can keep the business afloat for a short period. Small businesses can often make it through the rain with temporary payroll cuts that are reinstated as financials get back on track.

The key to avoiding layoffs within your small business is to think about the future.

Finding ways to keep employees will not only benefit them, but the business as well. Trusting longtime employees to assist in coming up with other solutions will add value to their position, and avoid costly rehires down the line.

Take advantage of being a small business. Your trusted employees are a priceless, untapped resource of ideas and solutions.

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Jessica Sanders

Jessica Sanders

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is a blogger and web content writer who talks about everything small business; from social media to blog design, and more. As a copy editor at, Jessica managed in-house blogs and many guest author relationships.

Jessica is a graduate of the University of Vermont and an avid runner. On the weekends, she enjoys spending time outdoors and with friends.

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