Control your bottom line

At a meeting this week, we discussed how businesses should be operating in tough, volatile times. I treasured the opinion one participant offered: “If you can't control your top line, then you just have to control your bottom line.”

There—in one sentence—is a survival strategy for uncertainty. Stay organizationally flexible, and you can endure whatever the economy throws at you. If sales improve, you can grow and thrive; if your markets tank, you’re ready to compensate and cut back.

Here are just a few ways you can make your company more resilient:

• Build a more flexible workforce (or as the old saying goes, “hire slow, fire fast”). How many full-time employees do you need, with their perks, benefits and paid holidays? Can you get away with using part-timers or consultants? Are there retirees who don't need 40 hours a week, but will gladly work any hours that you need them? (Note: this is not a license to abuse employees, but a wake-up call to use more flexible forms of talent.)

• Boost motivation (and results) by emphasizing performance-based pay. Offer to pay staff more for results (based on agreed upon metrics for sales, revenue, production, or other outputs) if they're willing to take a lower base rate. High performers may make more money this way, but you’ll be getting more results out of them. You may meet some resistance, but those willing to work with performance-based compensation will become the core around which you can build your business for the future.

• Reduce your overhead. Right-size your physical space, or renegotiate your lease, to make sure you're not paying more than you need. Investigate short-term rentals and local sublets so that you can house more staff (or inventory) only when you need them.

• Send your staff home. Some of the most talented employees I know now work from home three or four days a week. They are in constant touch with their fellow employees, and they use shared offices whenever they need to “go in to work.” You save on office space, they save commuting costs and time. Plus, home-based workers are usually more productive than the people you're watching every day in the office.

• Make employees partners in cost-cutting. Reward them for suggesting new ways to reduce fixed costs or operating expenses. Can you reward them with points (maybe your own frequent flyer miles) rather than cash?

• Communicate constantly to build trust with your staff. Make sure they understand why you need to more flexibility in the business, and why it’s in their interests to co-operate. Let them know that if they support the business during tough times, you’ll find ways to recompense them when things turn up.

Make sure you keep that commitment. Collaboration is a two-way street.