How Do I Decide Who to Layoff From My Small Business? (Podcast) | Ep. #061

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As a small business owner, you’re faced with tough decisions all the time. The hardest is who to layoff when you need to downsize. In episode 61, hosts Elizabeth Larkin and Gene Marks answer the question:

“We had a rough last year, and I’m thinking that I might need to let some people go. Most of the people on my team have and can wear multiple hats, so I’m not worried about losing a particular skill-set. Should I make decisions based on performance or seniority? My leaning is performance, but I don’t want to be disloyal to those who’ve really stuck with me, especially if the business hits another rough patch.”


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Elizabeth: Welcome back to the Small Biz Ahead Podcast. Gene, you were just telling me about a sign you saw this weekend that enraged you.

Gene: Yeah, well it wasn’t even a sign that I saw, Elizabeth. There was this viral thing that’s been going on this week online, and it is a coffee shop in New York. It was Virginia. Roanoke, Virginia is where this coffee shop was. And somebody from the coffee shop, an employee, put a sign outside of the store, and this is what it said. It said in quotation marks, “‘I’ll have a cup of coffee, five dollars.” Underneath it, it said, “‘Please, can I have a cup of coffee, three dollars.” And then underneath that it said, “‘Hello, I would like to have a cup of coffee, please, $1.75.” Right? Inferring that if you’re polite you’ll get the cup of coffee for $1.75.

Now by the way, the employee and the owner said they put it out as a joke. I don’t think it’s funny. I’m not laughing. I think it’s stupid. We talked about this before when I walk into any small business that as the sign like, “You can have anything you want as long as you ask for it on Tuesday,” or we love our customers except-

Elizabeth: Making fun of the customers.

Gene: When they’re making fun of customers or lecturing me or patronizing me, my first thought is like well to heck with you I’ll go to Starbucks then. And by the way, you don’t see that kind of nonsense at a Starbucks or a Marriott or even a McDonald’s. Can you imagine the corporate executives at companies that are really devoted to servicing their customers putting up signs that make fun of their customers?

Elizabeth: Yeah, no. They would fire an employee that did that.

Gene: They would fire an employee that did that. That’s exactly right.

Elizabeth: And it’s just because if I saw that sign I would think I don’t want to go in there because I’m gonna be judged.

Gene: Yeah. Right, that’s exactly right.

Elizabeth: So I would either say, “Okay I’m gonna find another coffee place,” or I would go in with my head down and just not feel very comfortable ’cause I’d be thinking they’re judging me. They’re looking for me to be rude.

Gene: Yeah.

Elizabeth: Which as we were just saying, if you go into any coffee shop, 99 percent of the people are very polite.

Gene: People are generally nice. Okay, maybe some people say “please” more than others, whatever. I get it. I’m sure these guys have got some jerk customers that come in, of course. I’ve got jerk customers that come in. I have two percent of the people don’t pay me, or vendors don’t deliver on time, or employees-

Elizabeth: Well that’s not even being rude, that’s just not doing your job.

Gene: Yeah, but that’s what it is when you’re running a business, but you don’t sit there for the other 98 percent of your customers and then patronize them. You know what it is, is it’s very small. It is showing just how small a small business you are when you behave in that way because you’re big-box competitors, the guy out there making billions, they would never behave this way.

Elizabeth: They wouldn’t.

Gene: It’s just proof that you’re always going to be a small business if that’s the way that you view your customers.

Elizabeth: What is the psychology of that? Why do you think owners allow that?

Gene: I think it’s just anger and frustration because they’re working very hard and they’re just not appreciated enough, and they feel like they have to get it back somehow-

Elizabeth: So how like as a small business owner then, how do you get that out without being rude to your customers?

Gene: Well, you don’t. You just serve them.

Elizabeth: You don’t. You suck it up.

Gene: Yeah, you just suck it up. You just serve them. It’s okay you’ve got a jerk he asks for a cup of coffee he doesn’t say “please” or “thank you,” whatever. You give the cup of coffee, you take the buck 75, and then you move along. Obviously if the person’s being harmful to other people or disruptive that’s a different story.

And by the way you don’t know if people are having a bad day themselves or whatever. I’m like okay, they didn’t take 30 seconds out to be nice to you, boo-hoo. But don’t put a sign in front of your store just again lecturing me, your customer. I have enough hassles from enough other people lecturing me and calling me “dopey” every day, you know what I mean? I don’t need this.

Elizabeth: Yeah, I think you also have to put yourself in your customers’ shoes especially with coffee. I used to go to this coffee shop in Hartford, small business, and the line was out the door in the morning. And I just went in, and they said, “What would you like?” and I said, “I would like a blah blah blah,” and I thanked them when they gave it to me, but they didn’t want to talk to me. Like they’ve got a line out the door. It’s people getting coffee on the way to work.

Gene: I agree.

Elizabeth: So I think when you make your customers feel like they’re being judged when you walk in the door, especially for a service business like that.

Gene: I agree. And we’re all service business. And when you make fun of your customers, or it’s a funny sign about customer service, it’s not funny.

Elizabeth: Yeah. So what was the fallout for this business?

Gene: Well their thing went viral. In other words they were all over the place. A local TV station did something on them.

Elizabeth: Wow.

Gene: And they were written about all over the place. Because it just happened, nobody reported on whether or not it was an increase in their revenues or more business or whatever. My prediction is that with that kind of an attitude long-term it will not be an increase in their revenues if that’s how they’re viewing their customers. But they certainly got a lot of attention.

Elizabeth: You do have to look at what big companies do. A Starbucks would never do that.

Gene: Yes. And as a small business that is the take away. Saying would the big company in my industry-

Elizabeth: Would Apple do this?

Gene: Yes. Would they behave this way? And if they didn’t there’s a reason why they’re not behaving that way. So stop acting like such a small, petty business.

Elizabeth: Okay, we’ll be right back with our first question. This is about laying off employees from your small business.

Gene: Oh man. I’m angry today, Elizabeth. Here we go. I can’t wait for this one.

Elizabeth: We’ll be right back.

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QUESTION: How Do I Decide Who to Layoff from my Small Business?

Elizabeth: Okay, our first question is from Terrence in Dillon, Montana, and Terrence owns a moving service. And he writes:

“We had a rough last year, and I’m thinking that I might need to let some people go. Most of the people on my team have and can wear multiple hats, so I’m not worried about losing a particular skill-set. Should I make decisions based on performance or seniority? My leaning is performance, but I don’t want to be disloyal to those who’ve really stuck with me, especially if the business hits another rough patch.”

Gene, I’m gonna let you take this one.

Gene: It’s a tough one. You know what I’m gonna say right?

Elizabeth: Yes.

Gene: You gotta do what you’ve gotta do to make money in your business. And to me it is always performance-based. It’s not seniority-based. And here I am as I’m getting older. You know maybe it should be seniority-based. But no. These kinds of decisions I think do have to be performance-based. Having said that though, that doesn’t mean you have to be heartless about it. I mean clearly he feels for it, so you don’t just give somebody a two week notice. Maybe you make it a sort of a longer-term transition. Maybe you could help that person find another job or refer them to other places. Maybe say, “Okay, let me give you sixty days to look for another job.” Particularly if it’s gonna be somebody that has more seniority with the company, you say, “Listen I’m gonna have to make this move, but I’ve really appreciated all of the years you’ve given me.” So you have to demonstrate that. “Let’s take sixty days and I’ll also make a few calls, see if I can help you here,” just to make this landing a little softer.

Elizabeth: Would you expect that person to come into the office and work for those sixty days, or are you saying you would just give them sixty days of salary?

Gene: It’s a really good question. I actually think that I would leave that up to the employee themselves. I think that it’s usually better just to cut the cord, right?

Elizabeth: I agree. I worked at a small business where they let someone go, but then wanted them to stay. So they told them two months ahead of time to let them know.

Gene: Yeah, it never works out well that way.

Elizabeth: We had a big event coming up that they had to work at, and it was so awkward. And the person was just saying, “I need to get another job. I have to look out for my livelihood. I can’t be here eight hours a day” because you know looking for a job-

Gene: Takes time.

Elizabeth: It’s a full-time job in itself a lot of times.

Gene: Right.

Elizabeth: So it was very awkward. So I think leave it up to that person, but I think it’s better to just say “I’ll give you two months salary, and I will help you in any way that I can to help you get a job.”

Gene: It’s the toughest thing in the world is to let people go. I have a client that has a similar situation, but markedly different in this way. This client is like a distributor, and they have an HR person, like their HR manager. She’s just terrible. She’s just not very good. This company’s making money. It’s not like this guy where he’s really got to do something, but they’re making money, but she’s just really not good. And it’s hurting them. HR is very important to this company. They’ve got about fifty people, it’s whatever. And they’re just not pulling the plug on her. They’re not cutting the cord with her. And every time I go and I talk to this client, it’s once a month, I’m like “Is she still there?” It’s really hard to do, to terminate somebody, it really is, but at the same time you’ve gotta look out for the best interests of your other employees and your shareholders and all the people that rely on your business for their livelihoods.

Elizabeth: Yeah, if you go out of business everyone’s out of a job.

Gene: Everybody’s out of a job, and if you’re suffering if you could be doing better and growing and hiring other people… And if she’s somebody that’s holding you back, you gotta make that tough call. It’s hard. It’s really hard to do, but you have to take a bigger picture. You know, look at the bigger picture.

Elizabeth: That is one of the downsides of running a business.

Gene: It is.

Elizabeth: Is letting people go.

Gene: It is.

Elizabeth: Alright, we’re gonna be right back with Gene’s Word of Brilliance.

WORD OF BRILLIANCE: Initial Coin Offering

Elizabeth: We’re back with Gene’s Word of Brilliance. Gene, go for it.

Gene: So it’s three words. I keep doing, you say it’s a word but it’s three words, but my three words are Initial Coin Offering.

Elizabeth: Okay, is that have to do with Bitcoin?

Gene: Yeah, okay not bad, Elizabeth. That’s pretty good. So Elizabeth, you’ve heard of initial public offerings right? A company gets to a certain size, they go public on Nasdaq or the New York Stock Exchange.

Elizabeth: They ring the bell.

Gene: Ring the bell, raise a bunch of money, it’s all that kind of stuff.

Well just recently a small company, an Israeli-based company actually, named Bancor, B-A-N-C-O-R, they went public too. They raised a hundred and fifty-three million dollars in three hours, and they did not do any filings whatsoever. Did not file any financial statements. Did not do any type of regulatory work. They did it all online in what is called an Initial Coin Offering. Look it up because-

Elizabeth: Is this the way of the future?

Gene: It is the way of the future. This company, they went pubic using a digital currency called Ether, which is a competitor to Bitcoin if you’ve heard of Bitcoin. And what this company did is they gave away what’s called tokens. It’s like shares of their company. And they do it all online, and people could buy these tokens using this online currency called Ether. There is a market for it. If you have Ethers, you can turn around and buy dollars with Ethers, just like if you have Bitcoin you can buy dollars for it as well. Without getting into what this company does, because that’s actually not relevant plus it’s kind of complicated, the fact of the matter is that they announced that they were going to be offering tokens in their business meaning you would have like a share in their business. They would be on a certain date, a certain time. If you want to purchase these tokens in our business here’s how you have to do it online using Ether. And they raised like hundred and fifty-three million dollars worth of capital using Ether, which they can then convert that into real dollars.

Elizabeth: Ether sounds medical.

Gene: Well it is. Right? It’s a gas, right? But that’s the name it’s part of a platform, which is a digital pyo currency platform.

Elizabeth: So small businesses looking to go public should now be raising coins?

Gene: I tell you that’s a lot of coin there. If you are looking to go public and you’re in the digital world, if you’re online, if you’re an Ecommerce company, if you are doing something that’s sort of digital currency friendly, look into an Initial Coin Offering. Go ahead and look it up. It is a new fascinating way to raise money, and in this case, lots and lots of money. They had some serious venture capital people actually put money into this.

Elizabeth: Cool.

Gene: Yep. Cool stuff.

Elizabeth: Alright, we will be back in a couple days with our next episode. Thanks for joining us.

Gene: Look forward to it.

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