In a rapidly changing economic climate, only the agile survive. It is only fitting, then, that we are seeing some Clark County companies cast ballast overboard in an effort to become more nimble during this economic storm.
For most of us, office space is our largest fixed cost, and thus our largest chunk of ballast. But can we do without it?
When business booms, our offices burst at the seams with clients, employees and contract help. We need every square foot and our rent expense seems inconsequential.
But when revenues dip, after we let the contractors go and stop taking our employees out to lunch, the rent bill suddenly comprises a larger percentage of our budget. We ask ourselves, ‘Should I cut an employee in order to make the rent?’
Cutting employees or eliminating morale-boosting team lunches first are exactly the wrong things to do. Instead, we should make ourselves more resilient by aggressively cutting our fixed expenses.
Can’t make rent? Close up shop and implement telecommuting. Can’t afford insurance and loan payments on the company fleet? Sign up for Zipcar and pay as you go instead. Can’t afford your phone bill? Switch to a more modest plan or let employees expense business calls made on their personal phones.
Scott Mikel, a real estate broker at Scott Mikel & Assoc. in Vancouver, recently made the hard decision to close up shop. But he and the 10 agents licensed at his firm are not going out of business.
Instead, the office is “going virtual” – giving up their bricks and mortar location in West Vancouver in favor of working wherever their work takes them: their clients’ homes, their home offices or the neighborhood coffee shop.
“The concept of a virtual real estate company has been in our long range plan for a while now, (but) the current housing market gave me the needed incentive to make it happen,” Mikel told me.
His industry already has been moving away from the traditional office paradigm. But the decision was still a tough one.
“As far as overhead, the choice came down to either cutting support staff or leaving the office behind,” he said.
Surviving an economic downturn is certainly not easy. But the economy, like any ecosystem, maintains its health through occasional periods of aggressive natural selection.
It has been said that anyone can make a buck in boom times. Those of us who survive the leaner years by making our own companies lean will come out the other side stronger, wiser and in a playing field refreshingly thinned of the less-capable competition.
