As a small business fights for survival during a crisis, there's often one vision that helps them get back through it: eventually returning to normal.
But businesses should think twice before simply calling everyone back when the coast seems clear. Despite the urge to return to how things were before, small business owners must grapple with the difficult fact that normal may not be coming back. A University of Wisconsin-Green Bay study found that after many types of disasters, a fundamentally changed business environment is common.
"We're going to be working in a new reality," says Thomas Epsky, an adjunct professor of business at Indian River State College and consultant with its Florida Small Business Development Center, of life after the COVID-19 crisis. "Leaders have to assess what's changed, what's changed temporarily, what's changed permanently, and what may be fundamentally different with customers, your capability and your competition."
All of those factors could turn restaffing mistakes into big financial blunders. Here are a few things small businesses should consider when looking to boost their staffing while rebuilding their finances.
Make a New Business Plan and Recovery Plan
A new business environment requires a new business plan and a recovery plan. Epsky suggests small business leaders undergo significant planning efforts before committing to rehiring employees.
This should include reevaluating their core mission, vision, competition, customers and best practices in light of the new normal. Once a business's updated strategy is established, leaders should create a recovery plan to get them from their current state to their new goals. Without such plans, small businesses are likely to make costly rehiring mistakes.
Consider Reskilling Employees
Part of a small business's recovery and updated business plans will include an analysis of new staffing needs. Jobs that existed before may not be needed. New roles might emerge that require specific skills.
"That doesn't mean people need to be let go," says Epsky. "You may have some dedicated, hardworking people who can learn new skills. It's an opportunity to rethink the way we use our workforce."
The Colorado Small Business Development Center's Disaster Recovery and Continuity Guide includes a checklist that can help small businesses evaluate their staffing needs during and after recovery from a crisis.
Let Revenue Be Your Guide
When should rehiring begin? The answer may vary by industry, but Chris Sica of Austin, Texas-based financial consulting firm The Ronin Society, says it's generally wise to wait until revenue stabilizes or starts to increase.
"If you can break up your revenue into specific revenue streams, then you can look at the stabilization or increase of specific revenue streams," Sica adds. That way, you can prioritize investing staff back into those areas of the business that are growing.
For those businesses that have predictive metrics, the hiring can potentially begin even sooner. "If you have sales funnel metrics, you can sometimes see the revenue coming before it hits by seeing an uptick in sales meetings being set," he says.
Rethink and Budget for Benefits
When budgeting for boosting staff back up, consider what changes in benefits and policies might affect the numbers. The swift spread of the coronavirus may have small businesses rethinking robust employee healthcare and paid sick leave as risk management strategies.
Other employee benefits could potentially help save on costs, like transitioning in-house roles to remote. Research from consulting firm Global Workplace Analytics estimates businesses can save an average of $11,000 for each remote employee based on savings in real estate, electricity, absenteeism, turnover and productivity.
"For the first time, nearly every organization has been pushed into doing things they didn't think were possible," Epsky says. "For so long, we've talked about flexible work environments. Now people are working from home and figuring it out."
Consider a Slow Ramp-up
Even with a plan in place, and even when revenue starts moving in the right direction, Epsky cautions small business owners against ramping up staffing too quickly.
"There are going to be so many unknown unknowns," he says. "We can't assume our customers will be coming back to us."
Other changes in the business environment, like new and different competition or challenged supply chains, could cause businesses to stumble a bit as they work toward growth, and having too many paychecks to cut too quickly could turn a stumble into another crisis. Staffing up in phases, whether that means starting with fewer people, fewer hours or both, allows for some trial and error with less severe financial consequences.
Implement Job-neutral Role Policies
A graduated restaffing period could raise questions for small businesses whose employees' roles are fairly siloed from one another. How can any amount of work get done without everyone doing their part? Sica recommends making it so that every role in the business can belong to anyone.
"Business should be standardizing processes so that roles in a company are interchangeable among different employees," he says. "They should also invest in technology that makes any one employee less of a key person so that the company isn't hostage to them staying or going."
This helps small businesses be more flexible when ramping up or if scaling back is needed.
Hire Strategic Workers First
One of the most stressful decisions for a small business to make when staffing back up after a crisis is who to bring back first. Fortunately, Sica's advice to be guided by revenue streams can make that decision a financial rather than a personal one.
"Bring employees back first who most contribute to the revenue streams that are coming back to normal," he says.
Then, consider whose talent can go the furthest.
"Oftentimes, people may try to bring back the cheapest labor, but that's not necessarily the best move," Sica says. "It's best to retain and bring back the best management talent and ask them to participate in doing some of the more daily tasks to save on labor but retain their talent."
Staffing back up after having to scale down is both an exciting and daunting time for small businesses. "Adaptability, flexibility and looking forward – not looking back – that's going to be the key," says Epsky. Add in a little strategy, and it's possible for small businesses to bring back employees in a way that prioritizes smart, continued growth.