November 20, 2017 | Posted in:

Get Profitable: 6 Alternatives to Reducing Payroll and Overhead Expenses

If your company’s revenue starts to falter, payroll may be a place you look for spending cuts. But before opting for layoffs as a quick and easy means of recovering profitability, consider this: the decision to lay off employees carries its own set of costs.

For example, the more people who are laid off, the more remaining employees may find reasons to seek employment elsewhere. If skilled and productive workers leave the company, product quality and customer service may suffer. Those left behind may feel overworked and suffer from diminished morale, which can lead to production errors. Certain direct costs, such as severance pay and unemployment insurance rates, may actually increase. And when business picks up again, your company may incur additional costs to hire and train new employees. In the long run, layoffs may actually hurt profitability.


Before taking steps to reduce the size of your workforce, consider these five creative ways to be profitable without making layoffs:


  1. Cut out nonessentials.

    Temporarily suspend company-provided meals and transit subsidies. Reduce travel and overtime as much as possible. Postpone buying the state-of-the-art equipment you may prefer. Audit your subscriptions fees to see what’s being renewed but not utilized.

  2. Reduce work hours.

    Consider transitioning from a five-day workweek to a four-day workweek to cut payroll costs by 20 percent. Offer employees unpaid leave time, especially during school holidays.

  3. Bring on interns.

    Some students may need to complete an internship to graduate from college. In exchange for college credit, they may be willing to work for minimal pay to gain real world career experience. See “What You Need to Know About Hiring an Intern” on our affiliate website, Abacus Payroll.


  4. Offer sabbaticals.

    Challenge your established employees to step away from the office for a period of time at reduced pay to attend training.

  5. Consider a virtual office policy.

    Perhaps some of your employees can work remotely from home, enabling you to free up office space and the associated leasing costs.

  6. Shift available resources.

    Instead of being faced with hiring additional team members when payroll is already tight, consider outsourcing accounting, payroll, and business processing tasks. Current employees can adjust priorities and workload to be more productive and you can pay an outsourcing partner instead of an additional salary with benefits. Learn more at


Last, talk to your CPA. Let them know where you stand and that you may be considering layoffs and they can take a look at your business to find areas where you may be able to cut costs and increase profitability.

Above all, it is crucial to keep your staff in the loop. Let them know why you’re making changes. Communicate the benefits of any short-term cuts, and stress your desire to avoid layoffs whenever possible.



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