business growth Archives - Page 13 of 17

How Do You Pay Yourself?

If you asked most people how much they would pay themselves if they could set their own salary, you’d probably hear a lot of 6 or 7-figure numbers being thrown around. But when you’re the owner of a small business, that question becomes very real, and is much more complicated. There are a lot of questions that you might be asking yourself, like should I start out paying myself? Should I pay myself regularly, like an employee? How do I pay myself and how much? The answers to these questions, while they might vary from business to business, are actually fairly straightforward. The following tips will clear up any confusion so you can get excited about taking home your hard-earned salary!

Don’t Be Shy: Pay Yourself!

That’s right, don’t undervalue yourself and the work you are doing as the owner! No matter where you are in your business’ journey, don’t forget (or choose not to) allow for your own salary in your budget. While your salary should come out of your business’ profits, not revenue, you should take some salary even if you’re turning a very small profit.

statistics with a bar graph, circle graph, and people silhouette in the corner — *Before paying yourself, calculate your personal monthly & yearly expenses, and how much profits your business makes.*

There’s no point in creating financial hardship for yourself in order to prop up your business. You will only end up stressed, which will affect your productivity and decision-making skills. When at all possible, take what you need to live comfortably, or at least take what you need in order to avoid problems in your personal finances, while still avoiding financial problems for your business. To figure this out, think about:

Your personal monthly and yearly expenses – start with only the essentials, including your purchasing habits and daily expenses
Your business’ profits – If you take out the amount above from your profits, will you still be able to cover your business’ current, and very importantly, future expenses? If so, great! That’s your bare minimum salary, and you should try to stick to it, at the very least.

Take “Reasonable” Compensation

While paying yourself from the get-go is important, you also need to know how to determine what is a “reasonable” amount to pay yourself, and when it is smart to actually limit your salary and use that money in other ways. As we have pointed out, your salary should come from the profits of your business, but you shouldn’t automatically assume that all of the profits will go back into your pocket as pay. In fact, according to the Small Business Administration, most small business owners pay themselves 50% or less of their profits.

In addition, the IRS actually has the expectation that you will pay yourself only a “reasonable” amount. What do they mean by that? Well, it varies from business to business, but some things to consider when determining your “reasonable” salary are:

How much would a company similar to yours pay an employee if they were doing a similar job to yours?
How many hours do you work, and is your pay directly related to that amount of time?
What duties are you regularly performing, and are your wages equal to those duties?
Does your pay seem reasonable when compared to your employees’ salaries, if you have employees?
If you saw an ad posted by a recruitment agency for a job similar to yours, would your salary seem to fit in that ad?

If you’ve thought about all of that, and perhaps talked with other small business owners about their level of compensation, then you should be confident that you’re not paying yourself too much. But there is one other thing to consider: whether it’s wise to pay yourself more in the short-term, and risk losing an opportunity for growth in the long-term.

For example, let’s say you’re turning a profit and you choose to add $5,000 a month to your salary. That’s 60,000 extra dollars to enjoy right now. But would it be worth it? Think of it this way: that’s money you wouldn’t have to put towards ways to grow your business and make more profit. If you used that $60,000 to hire a salesperson, for example, to take over some of your sales duties, that salesperson could end up making 10 extra sales. Those sales could mean $250,000 in revenue, and $100,000 in profit. You’d end up with more profit to pay yourself from, your hourly wage would be more valuable (since you’d be working less), and you’d have more free time – and what business owner doesn’t need more of that?

Know the Best Payment Method for Your Business Type

illusatration os a hand coming out of an envelope grabbing a money bill — *Figure out which way is best to pay yourself, depending on your type of business.*

So now that you have the tools to figure out your minimum salary, as well as some strategies for keeping your compensation “reasonable” and smart, you need to know how to actually pay yourself. This depends on a few factors, most notably your business entity type. There are two main ways to pay yourself:

Owner’s Draw – This is an option only if your business entity type is a sole proprietorship, an LLC, or a partnership. In these cases, the IRS views you as self-employed, so you don’t need to pay yourself a regular wage. Taking an owner’s draw simply means that you can withdraw profits generated by the business, or take out funds that you’ve previously contributed to operate the company, to pay yourself. An owner’s draw may also be a combination of profits and capital contributed. This money is then considered taxable income on your personal tax return. The money won’t have taxes withheld at the time you draw it from your company, so you’ll need to put money aside for when tax time comes around.
Salary – You can also choose to pay yourself a regular salary, or a recurring payment that is taxed by the government. If you own a C corporation or an S corp, then you have to pay yourself this way; if you own an S corp, though, you have the option of taking a draw in addition to your salary. The advantage of choosing to pay yourself with a salary is that your wages will be automatically taxed, so there’s no estimating and saving involved. If you choose to go this route, make sure you have some good payroll software to keep things running smoothly.

There is so much to think about when you’re the boss, and your own pay can seem like another stress factor. But remember, that’s the exciting part! This is what you’ve been working for – to see your dream come to life, and then turn into a profit that you can take home and enjoy. With the tips we’ve laid out above, you can take the stress out of paying yourself, and get back to work – and enjoying the fruits of your labor!

What It Really Costs Your Business When You Lose an Employee

Hiring an employee is expensive. Three different recent studies have found that the cost of hiring a new employee can be anywhere from $4,000 to over $7,000. Money isn’t the only resource that you use when making a new hire: it can take anywhere from 40 to 50 days to fill an open position. If that amount of time and money seems daunting, think of what it costs to replace a lost employee who you’ve spent so much time and money on: it can cost up to 50 to 60% of their annual salary, with the true costs of turnover sometimes soaring to 90 to 200% of your employee’s salary.

Those numbers will make any business owner stop and think about the importance of employee retention, but be aware that the costs of losing an employee don’t stop at the direct costs associated with replacing them. There can be indirect costs, as well, which can impact your business immediately or have more long-term negative consequences. If you’re not putting any energy into employee retention, or if you’re not adequately responding to the loss of an employee, your business could end up suffering from the following hidden costs.

Stalled Growth

skull and crossbones — *If you have a high employee turnover rate, then your business will be branded as toxic.*

There’s no getting around it – if you have employees, you’re going to have to deal with turnover at some point. But how you deal with it can make all the difference. In the short term, frequent, mismanaged turnover can stress out your remaining employees, and turn off customers, causing you to lose business. Stressed-out employees who feel that your business is in trouble will in turn be difficult to retain, and the cycle will continue.

In the long term, all of this could begin to turn your employer “brand” toxic. You might find that it becomes more difficult to recruit employees, and your pool of quality candidates could shrink, making it more time-consuming – and more costly – to find the employees you need to keep your business growing.

How can you keep this from happening? To answer this, you need to think about the next few consequences of losing employees, and look at how to deal with these consequences, so you don’t end up with disgruntled employees after the loss of a colleague.

Loss of Valuable Knowledge and Relationships

While you’re the one who put the work into writing your employees’ job descriptions, and training them to properly execute those duties, they are the ones who put in the work day-to-day. This means that they gain knowledge that is unique to them, and/or they build relationships with customers or clients that would be difficult to quickly replicate should they decide to leave.

illustration of a business woman with two people on each side handing her more work. — *Losing a knowledgeable employee can lose you valuable customers as well.*

For example, if you manage a sales team, losing an employee could mean losing quick access to detailed knowledge about customers’ needs, budgets, and preferences for anything from how they are contacted to how much small talk they like to engage in. While you are scrambling to get another employee up to speed on every customer that your lost salesperson worked with, your customers could get frustrated and move on. Anytime customers feel like service is going downhill, you run the risk of losing their business and, again, stalling your business’ growth.

There are numerous other examples of how lost knowledge can affect businesses. If you manufacture a product, losing a senior worker could mean losing knowledge of what your equipment looks like or how it performs when it needs maintenance, meaning you could end up with more breakdowns and repairs needed. Even for service-oriented businesses, which tend to have higher turnover rates, that turnover can be problematic, especially when it comes to front-facing staff. Customers like to be served by familiar faces who chat with them, know their particular preferences, and make them feel like “regulars.”

To avoid this hidden cost, or reduce its impact:

Have a succession plan in place
Take job training seriously, and make it an ongoing process. For example, have newer employers periodically shadow more senior staff even after they’ve gone through their formal training process. Emphasize that senior staff should be communicating not just the nuts and bolts of the job, but also the more nuanced knowledge that they have picked up along the way.
Make sure that employees are sharing knowledge and information with each other, so that they are naturally being “cross-trained” in each other’s roles.

Ensuring that any knowledge gaps are filled could help keep you out of the frustrating cycle of losing even more employees.

A Dip in Productivity

When you lose an employee, your team is not just down one person, they’re down two people – the departed employee and the person who has to hire and train the new employee. If that’s you, you’ll be splitting your focus for weeks or even months as you look for a new employee and then spend time training them. If you choose another staff member to do that, they’ll be unable to be a fully functioning part of their team. That means other employees picking up the slack of both your departed employee and the training manager.

Employees with overly long to-do lists could end up less focused and, ultimately, less productive. Having staff that is stressed and overburdened with tasks could also land you back in the same situations as earlier: losing more and more employees due to a mismanaged response to one employees’ departure. You can try to minimize the dip in productivity, as well as keep your staff as happy as possible by:

Resisting the urge to just fill the position with a warm body as quickly as possible. Making a hasty hire could put you right back where you started, only you’ll be down a few thousand dollars.
Really putting thought into how you can best support your staff until you find the right person to fill the job. This might mean hiring a temp as an extra hand for the grunt work.
Being open and honest with your staff, and discussing with them how to redistribute tasks. Whether you choose to hire a temp or not, your regular employees will inevitably have to take on some of the work of their missing team member. Talk to them, manage their expectations by explaining that it will take time to find the best possible person to fill the open position, and get their input. Having an open dialogue could help manage feelings of being overwhelmed by work.

Hold Onto Your Employees!

colorful post it notes with motivational words relating to business management on them — Avoid a large turnover of your employees by finding ways to keep them by guiding them, asking questions, and mentoring them more.

If you lose an employee, and you don’t manage this loss properly, you could be heading down a dangerous path. Stressed, overburdened employees are harder to retain, as are ones who can’t advance in their positions because there is no time to implement any development plans. To avoid the cycle of high turnover, spend time thinking about how you can keep your employees before you lose them!

Start by examining why your employees might want to leave in the first place. Consider whether:

Your pay is competitive
The culture of your workplace is positive
Your employees have enough support, opportunity, and chances to feel engaged

Then, you can try to go more in-depth by getting feedback from you staff:

Conduct exit interviews, if possible, with employees who leave voluntarily.
Offer a “climate survey” to current employees, so you can get a feel for what your current employees are thinking.

Once you conduct these surveys, be prepared to implement changes based on them – if you don’t, your employees could feel like you’re ignoring their concerns, and they might become even more dissatisfied.

It’s inevitable: if you’ve got employees, you’re going to lose a few along the way. But considering the costs – both obvious and hidden – to your business, you should do your absolute best to keep turnover as low as possible. Stay out of the cycle of lost employees by making sure that you’re constantly training, developing, and supporting your staff – after all, you can’t grow without them!

To Franchise or Not to Franchise: The Pros and Cons

When most people hear the word “franchise,” they probably think of a huge, modern-day corporation, like McDonald’s, and its thousands of fast food outlets all over the world. But this type of business model is not new; in fact, it has been around since at least the Middle Ages, and the modern version of it is credited to Benjamin Franklin. What’s more, it is certainly not limited to businesses the size of McDonald’s. With a little work, anyone with an easily replicable business model can franchise their company – small businesses like florist shops, electrician services, boutiques, and even early education centers do it all the time.

Why do small businesses choose this option? Simple: franchising can be a quick way to grow your profits without having to put all the work and capital into running a second (or third or fourth!) location yourself. But is it right for your business? There are pros and cons that you need to consider before deciding.

The Two Main Franchise Business Models

First of all, how do franchises work? Simply put, you, the business owner (or franchisor), own the business, but license someone else (your franchisee) to use your trade name and operating systems. The franchisee pays you a fee (called royalties) to use your business model, and you enter into a legal and commercial agreement with them, as well as provide them with training, support, and operational instructions.

Let’s look at the two primary types of franchise business models, so you can get a better idea of whether you think your business is replicable. The two main types are:

Product Distribution Franchises – In this model, the franchisor manufacturers the product and the franchisee sells the product. It is similar to a supplier-dealer relationship, except that in the franchise relationship, the franchisee may distribute the products on an exclusive or semi-exclusive basis instead of being able to sell several different brands at once. Coca-Cola would be an example of this type of model.
You can choose from two different franchising routes.
Business Format Franchises – This type of model is more common, and probably more suited to most small businesses. In this model, the franchisee is allowed to use the brand and trade name of the franchisor, like in the product distribution model, but they have access to more than just the product – they also have access to the product distribution model. In other words, your franchisee would sell your product or service in the same way that you do – think fast food or clothing store chains.

The Pros

Second, is franchising right for you? If your business is booming, and you think there’s a market for it to be franchised, then you need to carefully weigh the pros and cons of expanding it in this way. There are three major advantages to franchising your business:

More talent – While you can certainly find talented employees who are willing to work hard for your business, it could be much easier to find talented people who are willing to work hard to run their own business. Your franchisees will have a financial stake in your business and so will be more invested in working hard to keep it growing.

Easy growth – If you’re looking for an easy way to obtain expansion capital, franchising could be the way to go. Franchisees pay you so that you can expand, giving you quick access to funds without having to deal with banks or investors. And that means you’ll be able to pump more money into your inventory, marketing costs, etc, so you can keep the cycle of growth going.
Less risk – Franchising can generate high financial returns for relatively little risk. Unlike adding a new location that is owned by you, when you franchise, you put relatively little money into opening a new franchised outlet. In addition, if you’ve got a good business model, the royalties you make from your franchise could end up being more than the profits you would have made from opening your own new location.

The Cons

person holding an umbrella with a seesaw with a bag of money on one end and the word risk on the other end. — *Unfortunately when you have a franchise, you have less control and more risk with other business managers.*

There are definitely some compelling reasons to franchise your business, but there are also drawbacks. The three major cons of franchising are:

Less control – Franchisees are not your employees, they are independent business owners. As such, they are willing to work hard for your business, but they also have their own goals and you may end up coming into conflict with them over certain things. For example, your franchisee makes money from their franchise’s profits, and you make money by collecting a percentage of their sales as a royalty – this means that your franchisee will not be happy with anything that boosts sales but not profits, like promotions or coupons. You’d have to work this out with your franchisee – again, they are not your employees – or you could end up in a legal tangle.

A diluted community – When you manage a team at your own locations, you’re all rowing the same boat, so to speak. If you end up with multiple franchisees, however, you could have a situation in which some franchisees are willing to let other franchisees do all the work to drum up business. Or, even worse, you could end up with franchisees who all assume that the other franchisees will pay for advertising, for example, and no one ends up putting in the time or money to grow your business.
Fear of change – Being the owner means innovating, coming up with new ideas, changing…but being a franchisor means having to run all of your new ideas past your franchisees, and getting them to agree to your new ideas. That can require negotiation on your part, and you could end up butting heads with a franchisee who is worried that any changes could affect their profits.

Tips for Getting Started

Finally, if you do think that franchising your business is right for you, then it’s time to sit down and really think about the marketing, legal, and logistical ramifications of your choice. Start by doing the following:

Taking the time to outline exactly how your business works – This is generally a good idea anyway, so you know for yourself exactly how clear you are on your business’ marketing strategy, design, staff training, etc – but you’ll definitely need to be able to convey everything in a crystal clear, well-outlined way to franchisees.

Talking to a lawyer – Getting legal advice is a must, especially for help with filling out a Franchise Disclosure Document, which you’ll need before you can move forward with your franchise.

Working on building and protecting your brand – Think about it: if you’re going to be a franchise, you need a solid, recognizable brand – and you’re going to need to protect it. Don’t let anyone use your brand in any way that is not approved by you.

Talking to prospective franchisees – Treat picking your franchisees like picking a dating partner – be picky! Just having the money to buy into your business is not enough, they need to be able to run a location and represent your business.

Thinking about locations – Decide where you would want new outlets of your business to pop up – nearby? Far away? Remember, if they’re too close together, they could cannibalize each other. Too far apart, though, and you could be looking at some major inconveniences.
Finding a mentor – Talk to someone – or lots of people! – who have gone through the process. Get honest, trusted opinions, and, if you decide to move forward, pick someone who’s willing to give advice as you go.

When you started your business, you probably had big dreams about growing and expanding – and now you’re at the point when you can start to think about how that growth will look. Congratulations! But now comes the next stage in your hard work: looking at all the different ways that you can grow your business. Franchising is one of these ways, and, if you’ve got the right business model, this choice could catapult your business to the next level.

Are You in the Loop? Using Viral Loops to Grow Your Business

It’s no secret that in order to survive, your business has to grow. How that growth looks might differ from business to business. You might not be interested in adding locations, franchising, or expanding your product lines right now, but one thing you do need to think about is customer acquisition. There are lots of strategies your business can implement to gain new customers, but one that has proven very successful for many well-known brands is known as a viral loop. This growth engine has boosted the bottom lines of big brands like Uber, Dropbox, and Airbnb, but the beauty of it is that you can easily put this idea to work for your small business.

a hand holding a magnet attracting silhouettes of people. — *A surefire way to gain new customers is by trying a viral loop for referrals.*

How Does a Viral Loop Work?

For a business, going viral isn’t all just luck. You can plan for it and make it part of your marketing strategy. A great way to do this is by building a viral loop. Simply put, a viral loop is a way to get your current customers to refer you to others, who will in turn refer you to even more people, and so on, so that you – hopefully! – create a lasting loop of continuous referrals that leads to continuous growth.

Here’s how the process works, broken down into stages:

The “install” or “purchase” stage – A new customer tries your product or service.
The “desire to share” stage – When you gain this new customer, the first thing you need to do is to advertise a referral program to them, and invite them to share your product or service with their friends. How do you ensure that they’ll do this? Offer them an incentive! So, if your customer shares your product with their network, and one of their friends eventually becomes a customer, then your original customer is rewarded in some way, like with a discount or free gift.
The “share” stage – Your customer is intrigued by your referral program, and takes you up on the offer.
The “see” stage – Hopefully some of your original customer’s friends will see the message from their friend, trust their friend’s opinion on your product, and decide to try it. Now the “install” and “desire to share” stage begin again!

Notice that viral loops are different from viral marketing, which uses highly shareable content to get your brand noticed. Viral loops use the same principle of creating a cycle of sharing, but the aim is more customer acquisition focused.

Types of Viral Loops

All viral loops use the same basic structure as above, but there are different types, or different ways to incentivize your customers to share your product with their friends. For example, the following things could be used to motivate your customers to get in your loop: three red gift boxes in different sizes

Savings – Free stuff is always tempting! You can offer your customer a discount, free item, or credit for each successful referral.

Value – Similar to offering savings, you can also offer an incentive that both your customer and their friend get.

Charity – Many businesses nowadays are getting in on the “buy one, give one” model. In the viral loop model, you promise to give something to a charitable cause for each referral that your customer makes.
Friendship – Similar to offering value, you can motivate your customer to offer their friend something that is “helpful” to them. For example, Uber offers free rides to each customer referred.

Creating a Successful Viral Loop

Viral loops follow one basic structure, but there are ways to tailor them to your business: what you choose to offer your customers is totally up to you. There are things, though, that you need to consider in order to create a successful viral loop.

Put some thought into it – Figure out how and when you’re going to invite your customers into your referral loop. Will your entry point be right after they make a purchase? How will you make the offer stand out and look enticing?
Make it worth everyone’s while! – You need to make sure your referral incentive is something that customers will find valuable, but you also want to make sure that it’s cost-effective for your business! You should also consider an incentive that rewards both your original customer and their referral, making it more tempting for both of them to get on board.
Don’t close the loop – If you can, make the incentives you offer cumulative, so that customers can continue to earn rewards – and continue referring more and more people.
Keep it simple – Don’t make your incentive system overly complicated, or give customers too many steps to go through to refer their friend and get their reward.

Going viral can really grow your business, so don’t sit back and just hope that it happens to your business. There are solid strategies that you can try to get people engaged with your business, and eager to share it with others. With just a little work and creativity on your part, you can create a viral loop that will hopefully get your customer base growing exponentially – and will boost your bottom line!

Starting a Business? Avoid These 10 Major Mistakes!

Nobody said starting your own business would be easy. There are so many moving pieces, and you are responsible for everything. The pressure of solo entrepreneurship can lead to stress, setbacks, and tough decisions. There are no guarantees that you’ll make it: in 2019, the Bureau of Labor Statistics reported that only 20% of businesses keep their doors open past the first year, and 50% of those who do stay open close in their second year. Opening and sustaining a business requires funding, timing, and faith. While we can’t give you those three things, we can share some of the hard-won lessons from businesses that didn’t make it. Here are the top 10 common mistakes business owners make, and how to avoid them and survive your first crucial years.

man sitting in front of a laptop with his hand on his head and phone to his ear. — *Don’t think you can start a business alone. You need a great staff.*

Thinking you can do it alone.

To be an entrepreneur means being committed, dedicated, and independent. You see yourself as a jack of all trades and are often keen to do everything on your own. Waiting to hire staff or to outsource responsibilities could be catastrophic, though: as you become busier and busier, you might overlook important details, or let necessary tasks fall by the wayside. Hiring, training, and retaining quality staff before it becomes necessary is a must-do for all new business owners.

Taking too much advice.

When you announce your plan to start a business, everyone is going to have advice for you. Family, friends, neighbors, colleagues… you name it, they’re going to have something to say. Generally speaking, ignore it all. Seriously! Unless the advice is coming from someone who is financially invested in your business or who you truly consider a mentor, accept it gracefully and then disregard it. This is your business, and your life. Taking advice from someone lacking expertise could cause you to doubt yourself, or even to make a catastrophic mistake.

Living outside your means.
Do not live outside your means or your business will fail.

People say that “the first year is the future year” – the foundation upon which your business can thrive, or dig itself into a hole, so don’t send your business to an early grave with overspending. Starting a business is a financial investment, but you shouldn’t feel pressured to purchase high-ticket items when there are reasonably priced alternatives. You may feel confident enough in your vision to justify it, but your best bet is to live within your means for the first few years.

Cutting the wrong corners.

Frugality is important when starting a new business, but there are some things you just can’t cut corners on. Insurance is one of these things. Monthly premiums may seem like a burden, but they are significantly lower than the legal fees or repair costs that you might be hit with if you don’t have insurance. Hiring a professional bookkeeper is another necessary cost: miscalculating taxes can lead to hefty penalties and late fees, and it’s important to know how to budget for your quarterly and year-end tax bills.

Selling yourself short.

Getting ahead of yourself and overspending can spell disaster, but so can not thinking big enough. You need to be prepared for success. Imagine that your business thrives and you’re asked to produce more of your product or provide more of your services. Would you be able to? Successful entrepreneurs have a strategy for scaling up when (not if!) their success demands it.

SMART goals written on a blackboard. — *Set Smart goals for your business’s success.*

Setting the wrong goals.

Goal setting is incredibly important, and the types of goals you set can make all of the difference! By following the SMART goal strategy you can formulate goals that are specific, measurable, attainable, realistic, and timely. Having organized goals can help you avoid burnout – you’ll have reasonable expectations and a clear way to meet your goals.

Forgetting your role as entrepreneur and salesman.

It’s easy to dream of being the next Steve Jobs, but in the beginning stages of your new business, you must first work as a salesman. The product? Yourself. Someday you might have the same name recognition as Apple’s CEO, or Amazon’s Jeff Bezos, both of whom can walk up to any table and have a seat. You don’t automatically earn a seat at the table: you first have to successfully pitch yourself to your potential clients or collaborators. Remembering that should encourage you to bring your A-game to all meetings, business or casual.

Ignoring your victories.

Building a business from the ground up is hard work. It means putting in early mornings, late nights, and days away from family and friends. It can be emotionally and physically exhausting. To avoid burnout before you even get your business off the ground, it’s important to acknowledge and celebrate your victories, no matter how small they may seem.

never give up on a pink piece of paper and a red pen next to the words. — *Starting a a business is not easy, but it is important to never give up.*

Considering quitting.

I’ll say it again: entrepreneurship is no walk in the park! Selling yourself and your product, playing the role of manager, salesman, CEO, and innovator all at once, is a lot of pressure! Many businesses don’t survive – but in order to make it, you can’t even begin to entertain the idea of quitting. Steve Jobs famously said, “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”

Fearing failure.

Similarly, you can’t act out of a fear of failure. This results in guarded, hesitant actions – and would you invest in someone who didn’t believe in themselves? Fearing failure, while completely understandable, can cause you to second guess yourself and make rash decisions, which could end up damaging your business.

The Long Game

When you’re running your own business, you’re playing the long game. The first few years are survival mode, and unfortunately it doesn’t get much easier after that! Surviving past the first few years is a testimony to your resilience, authenticity, strategy, and skills – and the success of your business will always be worth the effort.

Does Boosting Employee Experience Boost Your Bottom Line?

There’s a new school of thought in the business world, one that makes positivity and employee experience a higher priority than it was in the past. It used to be that the majority of businesses focused on fiscal performance above all else. This meant that many workers experienced catastrophic burnout and that the daily grind became a “rat race” from which they were dying to escape. In recent years, however, the idea of using company culture as a benchmark for performance success has gained traction. Evidence is showing that the companies that are experiencing the most financial success are the same companies that prioritize worker experience and company culture.

What does this mean for your workplace? Well, companies should begin to recognize (if they don’t already!) that a positive workplace culture makes them more competitive, increases employee retention, and boosts their bottom line. So, if you’re not sure if your workplace has a positive culture, or if you would like to focus on elevating your employee’s experience to benefit your finances, we’ve compiled some strategies to support you in making these changes!

Office Culture

Your workplace has a culture just like any other community, with its own set of rules, norms, and values. This culture is evident in a variety of ways, including:

Management’s approach to supervision, feedback, and conflict resolution
Communication standards, including frequency, language, and chain-of-command
Work-life balance and boundaries
Camaraderie and rapport among colleagues
Expectations around length of work days, holidays, and time off

Generally, these cultural aspects are informed by the values of higher-ups in the organization, and there may be times when the beliefs of management and the beliefs of the workforce don’t mesh. For example, some management teams value an in-person workforce, supporting the traditional 9-5 schedule and the idea that you have to show up to be heard. This more traditional way of looking at how a workplace operates, however, might isolate or exclude top-tier employees who can work more independently or who might benefit from being able to work from home.

Values are incredibly personal and discord between the values of an employer and their team, or a rigidity and inflexibility on the part of the higher-ups, can result in a negative experience, most often for employees. The impacts of a negative workplace culture can be devastating for employees, resulting in:

woman with her head in her hands feeling stressed — *The impacts of a negative workplace culture can bring on stress and feelings of frustration.*

Disputes or arguments between employees and management
Feeling disinterested or unmotivated
Pent up feelings of frustration and anger
Physical symptoms of stress, like headaches, nausea, and muscle aches

The worst possible outcome for employers is that an unsatisfied employee will leave their position. If that happens, you will not only lose that employee and their potential, but you will also have lost an investment of your time, money, and expertise. Remember, if one employee is dissatisfied with their work experience it is likely that others are, too. When one employee leaves, it can trigger a domino effect, and even impact recruitment as word spreads about a toxic work environment.

Promoting A Positive Culture

There are things you can do to avoid a toxic workplace culture and ensure that employees feel like valued members of your organization’s community, who will then want to contribute to your business’s success.

Identify employee needs. You might send out a survey assessing their experience with workplace culture, offering space for commentary and feedback.
Formulate a plan. Come up with an organization-wide plan to address your employees’ feedback. It’s possible that some of their demands might not be feasible. If that is the case, it’s important to be transparent about the issue, rather than avoiding it all together.
Invite employees to take ownership. Perhaps you don’t have the bandwidth to address some of the issues your employees have raised. Instead of ignoring the problem, you can encourage your employees to take matters into their own hands by forming a coalition or committee to work on the issue at hand.
Find a compromise. You won’t be able to fix every issue, but when you can compromise, do. For example, you may not be able to allow everyone to work from home all the time, but can you offer your staff one day a week to work remotely?

Maintain changes. This is the most critical step. In many cases, management implements changes to appease their staff, and within six months things have slid right back to where they were before. This can be even more devastating – a taste of what could have been – and can leave employees frustrated and angry. To avoid this, create open channels of communication for employee feedback. Maybe you have a monthly town hall where staff can voice their concerns, or have scheduled weekly “open door” hours where your employees can come to you about workplace issues.
Check in annually. All of these strategies, especially a needs assessment, should be implemented at least yearly, to ensure accountability and accommodate any changes.

The Bottom Line

In days past, suggesting that businesses care about the culture of their workplace and employee satisfaction might have gotten you laughed out of the board room. Now, though, savvy business owners know that to value, respect, and include their employees in a positive workplace culture is to increase productivity, support success, and boost their bottom line. Overworked, undervalued employees have a lower productivity rate, are easily distracted, and often end up leaving the company. But when you invest in a positive experience for your employees, they are more likely to go above and beyond for their company.

Tag: business growth