I've never laid anyone off before and I don't know if I should
For backstory: Last January I became a 45% owner of my small law firm. My partner plans to retire in 3.5 years, in which case I will become the sole owner. I've never been a manager (or business owner) before, so this is all new to me. Our arrangement is split the way it is so that he has the ultimate say in situations of disagreement. I was initially okay with this due to his 20 years at the firm and my inexperience in management, and so far he has been willing to defer to most of my opinions, so it was never a problem --- until now.
This year our business is facing financial hardship. Client numbers are down, and a type of work we used to do that brought in large sums of money has all but dried up. There seems to have been a slow but steady decline for a few years. We've made consistent attempts at marketing and client acquisitions, things we can afford to do, to no avail. We've made all the cuts we can - closed an office location (building, not staff), improved/updated IT to avoid duplicate spending, streamlined processes - but we are inching close to not making payroll.
So far all of my partner's solutions have cost us more money (buying leads, paying for more marketing). He recently bought a remote worker a brand new printer, and spent money for new PDF licenses when the old ones were slow but okay.
Now he wants to give everyone their yearly raises - which are not based on merit and have just become an expectation of employees. Last year we did standard COLA, this year he wants to go to 4%. I know this isn't a ton of money, but I feel like every bit matters right now. In my head, when we can't even make payroll, how the hell can we afford to increase all wages?
I've repeatedly mentioned the idea of layoffs to him. Even though we are a small business, I know 3 people that could be eliminated easily. With our lack of business, I do not believe the downsize would affect the remaining employees much (they might not be happy, but it's definitely doable, and I would likely increase the pay of those that remain). 2 of the 3 employees are retirement age, and my partner is constantly fearful of discrimination lawsuits. But we are in an at-will state, and we would not be replacing them for a long time, and only if business bounces back.
My partner's ultimate band-aid is talking about providing his own money as a loan to make payroll. I am extremely uncomfortable with that, since I will solely be on the hook for that once he retires. Other than the fear of lawsuits, I think he is just really uncomfortable firing people. He barely even likes reprimanding anyone.
So am I wrong to want to do the hard thing and pursue layoffs? Obviously I've never done this, but from my education and general life experience, this doesn't seem like a drastic or unfair move. It's unfortunately a necessary part of business, in my eyes. At this point, we don't even have enough work for everyone. And the recouped wages will definitely help keep us afloat until we can figure out a way to increase our client base again. Because if not, we will ultimately just have to shut down, and then no one has a job...