Payroll is typically one of the largest expenses for a small business. It takes a lot of resources to process paychecks, keep up with tax requirements, and hire competent people for the jobs you need done. Before making serious cuts to payroll, consider some of the other areas you can look to cut costs include your discretionary spending, rent, and capital costs.
Get Rid of Discretionary Spending
If you’re consistently spending money to reimburse employees for discretionary items, it’s time to stop. If your business isn’t doing well, the perks you have in place now may need to be taken away before you begin to cut employee salaries. This will help keep you in good graces with your employees since they won’t have to feel the brunt of the cutbacks in their paychecks, and even very small things can make a difference. If you consistently buy lunch for meetings, explain to employees that there is a real need to reduce expenses for a while. If employees each chipped in a few dollars, you could still save money and help pay for lunch. Other options to get rid of may include options like paid parking spaces for employees, daily papers, and bottled water for the office.
Use Employee Onboarding Software
When hiring new employees, it takes a lot of time and resources to get them up to speed. Onboarding software can help reduce this burden. Using this software, you can make sure employees have the ability to get ready for the first day of work on their own. Employee onboarding equates to less money spent on things like recruiting and training and a system like this helps get your employees acquainted with the company and gets everybody on the same page.
The best programs will tell new employees what is expected of them, and how to prepare for work in their new job. This can drastically reduce the manpower required for training, and the final on-the-job training will take fewer resources and require less from your already stretched payroll budget. A good system keeps track of paperwork and gets everyone on your team on the same page.
Switch to Online Payroll Systems
If you’re still using paper checks, it’s time to stop spending money on your printing costs and start using a digital system. This can help you save some money, and makes completing payroll a much simpler process. By freeing up time for your employees to process payroll more efficiently, you’re saving money that could be used to pay for other much-needed expenditures. Many times, you can even get a free trial to save money during the initial stages of getting set up with the new system. This can help offset the cost of training.
Deciding to Cut Payroll
If you’ve taken other steps to mitigate the effect of a poor fiscal year, it’s time to consider cutting your payroll. Making employees take an additional day off per month is one option, but you should cut your salary before you begin cutting employee salaries. This is important to do even if you already have a very modest salary. It lets your employees know that the company is doing everything it can to stay in the black. They will appreciate that you’re willing to sacrifice your own lifestyle to keep them on board. The next step is to talk to any employees that are paid extremely well and ask them about any circumstances they could accept to receive a lower pay. Cutting people at the bottom of the pay scale should be avoided at all costs.
Ultimately, when you have to cut your payroll costs, it’s important to think about the least invasive procedures and move gradually toward more invasive ones. Think about your employees, and remember that one of the reasons you’re in business is to contribute to your community and help people succeed.