If we’re to survive this, the key will be in cost reduction. Looking through the Profit and Loss, we can make the following adjustments:
Believe it or not, I wouldn’t consider furlough for this business. Chiropractors form deep personal relationships with clients and losing your practitioners will lose you customers. However staff costs are the lion’s share of the overhead, so instead, I would ask all members of staff to take a 50% pay cut for a few months.
There is no doubt that this will be an unpleasant conversation, but a whole lot better than furlough. If explained correctly and phrased as the alternative to redundancies I think it would be possible to achieve.
This will reduce payroll from $448k p.a. to $224k p.a. … saving us $18.5k per month. I’m also going to keep the employee benefits intact to look after them as much as possible.
We can scrap utilities, office supplies, tech support and x-ray film easily. That saves $25,035 p.a … $2,086 per month
The harder list to reduce is rent, legal fees, accounting fees and professional organization membership. Assuming you can negotiate hard with these let’s go for a 10% reduction on average for the 6 month period. That’s $2,830 pa, or $235 per month
Net savings per month are $20,821, bringing us from $47,000 per month to $26,179 per month. With a cash balance of $140,000 we now have 5 months of survival which should carry us through.