Lagos Money Gossip Pt. 3
Experiences and advice for young entrepreneurs in Nigeria
Most employers know way ahead of time that they cannot afford to pay salaries for certain months, and sometimes, it’s not for lack of proper planning, and other times, it’s no one’s fault in particular. You might even ask yourself what was missing from your fool-proof plan, but you see, in the start-up world, a lot of we expect to happen in the first few years do not actually happen. Some of these things might include breaking-even super-early because you have a B2C product or because all the numbers seemed to add up.
With this imminent danger, you now can’t function right any longer and sometimes dread coming to the office so you don’t get asked “how far?”. The moment you realize this about your salaries, damage control must begin. We also think you can try any of these four ways about it for size.
1. Inform Your Employees
This is not the easiest thing to do and you may have to work up the courage to do so, but we find that carrying your employees along early on or speaking to the managers personally to get their buy-in and they in turn do the same to the rest of the staff, can significantly soften the blow. At least, it sure beats waiting until it’s payday to inform them. The most difficult part of this method is that you may lose some of your most valuable assets because you cannot force them to stay on without pay.
2. Utilize Available Resources
It’s time to make like a branch and split existing receivables from your old inventory. You may need to slash some of these debts by 50% even and forget the rest, as long as the debtors can pay that half, within the next 24 hours or at your preferred time. This way, you live to pay another day.
3. Try Not To Pay Half
Crazy right? A lot of us usually don’t go completely broke, we sometimes just don’t have enough to go round the table so we quickly think to pay half over nothing at all. Well, don’t. That’s a lot of harm to your overhead in the future that you may not be prepared for.
So try this, ask your most senior staff, including yourself, if you can delay their payment just for a few days, then use their pay to divide and conquer amongst the other junior staff. Be sure to approach with the confidence that you have a plan to pay them and show your other staff the sacrifices that top management is making to ensure that everyone is satisfied. This can boost cooperation and loyalty if such happens again.
You need to bring it to win it.
4. It Might Be Time To Restructure Your Business
Once everything has calmed down and you’ve managed to find a way to also stay in business, you should revisit why those dark times happened and think how you can avoid that risk and one of the best ways is to reduce your overhead costs. This means budget cuts and not only to the junior staff. Everyone one most especially you, should have their sleeves rolled up, and should be ready to take up more responsibility to save costs.
REACH for small businesses, allows you to quickly see the dangers in your finances by helping you to track and manage your expenses, helping you stay on top of your game and keep your most valuable assets at your company- the employees happy.