The Cash Flow Blog

In case this post is read years from now, let the record reflect times are tough for a great number of businesses and businesspeople — I’m writing this is October 2009.

The date of this post has nothing to do with the information that follows.

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I’ve maneuvered through a number of layoffs.  In fact, I’ve not only closed many offices on behalf of a company and personally delivered the layoff message one-on-one to dozens of employees, I’ve actually laid myself off.  But that’s another story.

I’ve seen a number of businesses struggle to survive.

Over the last year or two, countless people have lost their jobs. Some soon after lost their homes.  Both are terrible losses.  Life changing.

And the more you cut, the more you put those left behind at risk.  It happens more than it’s talked about.   It’s death by a thousand cuts.

What happens is a business reduces expenses in an attempt to survive.  The expense cut is staff.  Things look good for a while, then not so good.  And another staff reduction is exercised, and so on.

There is a limit whereby cutting expenses doesn’t work.  The point of no return is when operational capacity is pierced.  At that point, the cuts you make to staff limit your ability to produce, deliver, and support in your market.  Revenue falls.  And expenses need to be cut again.

Yes, this is over simplified.  But it’s true nonetheless.

The point is in an attempt to manage a cash flow problem and faced with a staff reduction, be sure you understand what’s being cut and the result.  Be sure to review and revise revenue forecasts, as well as your ability to produce and support the products and services you offer.  Then cut deep enough the first time to get ahead of the problem.

Don’t let your business slowly die one cut after another.

What say you?