ExteriorContractor.com |

Next — without considering the specific employees that you have now — make a list of the number of employees and job skills needed to accomplish the goals in your reduction plan. The skill list will determine what positions you need to keep in the new business, not the positions you need to eliminate. After making this determination, look at your current employees and decide who fits the criteria. Focusing on whom you’re keeping rather than whom you’re laying off helps demonstrate the business nature of your decision. Forming a committee to review your decisions is also a good idea.

Reducing Your Space

If you have less work, you may also need less space. One way to deal with excess space is to sublease it. This provides income to cover your rental payments (or mortgage, if you own your building) and makes use of space that you don’t currently need.

Be careful about the length of any sublease term. If business turns around and you need to upsize, you may want to get the space back. Unfortunately, the shorter the term of a sublease, the less you can charge per month. Consider adding a provision to your sublease allowing you to buy out the remainder of the term. Also consider renting to another contractor. If your business turns around, theirs is likely to turn around, too, and they may be looking to get out of the sublease to upsize at the same time that you want your space back.

Check your lease to see whether and to what extent you are allowed to sublease. Usually, subleasing is subject to a reasonableness standard, meaning that the landlord can’t unreasonably object. Keep in mind that just because you have a sublease doesn’t mean that you are relieved of your obligations under the master lease. If your subtenant doesn’t pay rent to you, that’s no excuse for you not paying the full rent to your landlord.

What if you can’t find a subtenant and you just can’t keep up with the rent? You could try to renegotiate your lease with your landlord: Perhaps he’d be willing to lower the rent payments now in exchange for raising the payments later. If you absolutely must walk out on your lease, you should make that decision carefully and in conjunction with your attorney. Depending on the terms of the lease, you may have less financial exposure by leaving.