Bloomberg News recently reported that according to a new survey, at least one in ten small businesses in the U.S. are expecting to lay off workers once their fiscal relief funds run out.

In another survey done by the National Federation of Independent Business, 14 percent of companies, who received a loan under the Paycheck Protection Program, anticipate having to reduce their workforce after using the loan. Among those companies, half expect to dismiss one to two employees, and 12 percent say they will likely lay off at least ten people.

For most business owners, overhead cost reduction programs implemented as a result of decreased revenue volumes have deferred the decision to implement labor reductions. Good people are often hard to find and business owners rarely want to have to lay off competent and efficient workers. In addition, many closely held businesses may treat their employees like family, and in the case of family-owned businesses, they actually do include family members!

Lay-offs are not always the answer under these circumstances.

In order to keep everyone on payroll, many businesses have implemented furloughs to reduce employee hours and related compensation for what they hope will be a short period. However, as the economy slowly reopens and we continue to see the possibility of a second wave of COVID-19 in the near future, some business owners may be faced with the challenge of making more permanent decisions.

Finally, with the expiration of the Federal unemployment subsidy, many employees, who were laid off, are going to be anxious to get back to work as quickly as possible. The question for business owners is, can I afford to bring them back?

For many clients who received PPP loan funding, these are the questions keeping them up at night. It is often said “Cash is King,” and answering some of these questions related to your staffing is highly dependent on understanding what your cash flow will look like in the upcoming months if there is no additional governmental funding or subsidy.

Not sure where to start? We can help!

We strongly urge you to complete a break-even analysis to determine the required revenue levels you must achieve in order to maintain your current staffing levels. This is the key to getting a head start on being able to strategically plan for any necessary labor reductions.

We have developed a template to help you begin this process and we can assist in customizing it to meet the needs of your business model.

Please contact your Zinner & Co. Client Service Team members to talk more about this service.