Silicon Valley Business School
Decide to Reduce Headcount
A Step in a Management Maneuver in the Mezzanine Stage of Startup Development

Making a decision to reduce headcount is a step in the process of cutting costs. Usually, in a technology oriented startup, salaries make up the bulk of the Company's ongoing costs, so cost-cutting often starts with a reduction in headcount. This is a decision that should not be taken lightly. Usually, such a decision will need to be ratified by the board of directors, and if the decision represents a departure from the Company's core business strategy, approval by a majority of the shareholders may also be necessary. This step is completed once the decision has been made to layoff staff and reduce headcount.

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