Small businesses are some of the most vital players in the business community, but the rate of failure is staggering. According to the Bureau of Labor Statistics, almost a quarter of small businesses fail within the first two years, and half are gone by the sixth year.
It's time to learn from their mistakes. A conservative cash position doesn't preclude you from thinking like the larger business you strive to be—your greatest asset as you grow is your employees. Here are five ways you can invest in your employees early on to help your small business grow.
Many small companies think they're too busy or budget-strapped for strategic HR, and end up outsourcing payroll, compensation and benefits to third-party providers. What's not widely discussed is the trouble these companies encounter after the function is ejected.
It's one of the great fallacies of small business HR planning: diminishing talent management to its simplest, "paper-pushing" processes in order to flatten management and save money. However, there are plenty of examples of the woes of companies without HR, including managers that become so bogged down with pay disparities and employee disputes they can't do their job.
The building and maintenance of your company culture, talent management, leadership brand and employee compliance need to come from within. Find an HR partner that understands your corporate vision and work together to create an actionable workforce plan that ensures both short- and long-term success.
You know your business plan cold; you can recite the figures off the top of your head. But do you know how that gets divided up among your employees or how their performance goals apply to your overall growth strategy? Without job descriptions and individual performance goals, you're setting up your people and your business for failure. Employees need defined roles and goals to remain engaged and motivated.
Once those goals are stated, it is equally as important to check in regularly to ensure they're being met. Whether that means an investment in a small enterprise system to track performance metrics such as sales, or HR enterprise software that allows for workbench performance management and performance evaluation, make the investment from the beginning, and hold yourself and your team accountable for using it. Knowing how your people are performing is a key component in tracking your business' overall performance.
As a small business, you are probably focused on a few measures of success, such as customer satisfaction, market penetration and sustainable cash flow and profit. Momentum toward any of these goals is enough to keep even the leanest of businesses energized, and having your employees engage with these goals will help create a winning corporate culture of inclusion and passion.
You can do this by routinely asking for ideas, rewarding creativity and encouraging out-of-the-box thinking. Investing in career mentorship reaps rewards as engaged employees delight in solving problems you didn't even know you had. Plus, the next big idea for your company could be brewing in the mind of the person who sits down the hall from you. If you don't ask, they might take it somewhere else.
Most businesses crash and burn because leadership collapses at the top, crushing the infrastructure underneath. Don't let this happen to you. Your leadership team collaboration is akin to the systems of the body working together for overall health.
You should constantly ensure all systems are running well, they're engaged, and they're prepared to lead appropriately. Set an example of how you want your employees to treat others, and then check in regularly to ensure that the communication style is trickling down through the masses. Your leadership team should be an extension of you, and together you should be evangelizing the passion for the business from the top and constantly ensuring the people at every level are engaged and connected.
As previously stated, you don't know what you don't know, so make it part of the review and performance process for your people to learn from both successes and mistakes. Support outside pursuits, reward continued learning and shine a light on those who bring stellar ideas from the outside. The only way for your business to grow is to continually enrich and educate yourselves to expand and try new ideas. A culture of learning will continually reinvent and reinvest in that process, which means your customers will reap the rewards of your continual strides for improvement.
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