Entrepreneurs Slash Their Salaries
Rather than close their doors or lay off workers, entrepreneurs are cutting costs and salaries—including their own, according to recent reports.
Staples, the Framingham, Massachusetts-based office products company, surveyed 300 small businesses and found 50 percent of owners are reducing their own compensation. Two thirds are cutting dining out, entertainment, and vacations, devoting their time and money to their business's stability, instead.
Previous surveys showed owners working around-the-clock, points out John Giusti, Staples' VP of small business marketing. But the recession has pushed owners to make financial sacrifices, as well.
"Before, it was about the amount of time, being constantly connected, and now, because the economy, there's more of a shift to staying afloat through the recession, so they are making changes to their level of compensation," Giusti said.
The survey also found businesses are experimenting with viral and word-of-mouth marketing strategies that are both lower cost and innovative.
"Not everything is about hunkering down, they're figuring out ways to generate new business," said Giusti.
Another recent survey by Surepayroll, a Glenview, Illinois-based online payroll firm, analyzed data from 20,000 clients and saw a slight hiring increase and pay decline. CEO Michael Alter thinks that CEOs are taking less money out of the business for themselves and reducing salaries across the board in an attempt to avoid layoffs.
"I don't have statistical data on it, but in talking to my clients, I think owners are taking less money home, in order to avoid layoffs or even closing the doors," he said.
He added, "Small business owners understand how long it takes to get people up to speed, to get good people you can trust, and that the knowledge that goes out the door in layoffs is huge."
Some CEOs are even hiring new talent while salaries are low, positioning their workforce for the recovery.