According to the U.S. Small Business Administration (SBA), more than 500,000 small businesses open each year in the United States. However, not every new small business becomes a long-term success story. In fact, recent statistics from the SBA reveal that 70 percent of new businesses survive at least two years and 50 percent survive at least five years, but only one third of them last at least 10 years, and just 25 percent are still in business after 15 years or more.
Why do so many small businesses fail to survive growing pains? While most small businesses start with just a handful of people and the goal of becoming established, at the two-year mark the goal becomes growth. With this new goal comes new challenges, including the need to assemble a growth-oriented workforce with the right mix of skills and the right number of personnel. As a result, small business owners face the delicate balancing act of hiring more talent while making sure they don’t spend money too soon or wait too long. Hiring has to occur at precisely the right time.
Along with hiring activity, retention plays an equally important role in the growth of a small business. Small companies simply can not afford to lose key staff, as the costs related to finding replacement talent are exuberant and the effort required is exhausting. Retention is especially important in today’s business environment, where there is a prohibitive shortage of skilled workers in many fields. In fact, this skill shortage plagues all companies – large and small – across many different industries, including engineering, IT, healthcare and manufacturing. This lack of specialized talent, while detrimental to all companies, could destroy small businesses — especially those in the most crucial phase of development.
In order to avoid becoming one of the 50 percent of small businesses that fail after five years, it’s imperative to connect with, and hold on to, your top talent. Here are some proven strategies you can use to keep your employees happy, productive, satisfied and, ideally, away from the competition:
Offer training
If your company is in a field where the skills gap is significant, such as engineering, manufacturing, or IT, offering your current employees training so they can improve their skills is a much better investment than hiring from the outside. Very often employees leave a company because they don’t see a path for career growth and development, then ironically employers look to the outside for talent because their current employees don’t have the right skills. Training is a win-win for employees and employers alike because it offers employees a chance to better themselves and perhaps, ultimately, pursue different, more challenging opportunities and roles within the company. You end up with enhanced talent and your people are satisfied and stimulated in their job. The investment can be significant, but the return can be immeasurable.
Reward with awards
Employees always want to hear their bosses tell them, “good job,” but take it one step further. Many large companies have formal employee recognition programs on a quarterly or even monthly basis, so give your workers that same respect. Whether it’s “employee of the month” or “best sales record,” these awards are a way to boost employee morale — and with a relatively small monetary prize — their wallets, too. It’s all about recognition and, frankly, many times it’s non-monetary praise employees seek.
Make it flexible
Having a work-life balance is one of the top priorities for any employee. Giving them the freedom to work from home a certain number of days a month or providing Summer Fridays as a perk go a long way in developing loyalty.
Show them the money
We’re not talking about pre-recession Wall Street-style bonuses, but given that small business employees are so emotionally invested in the success of their company, giving spot bonuses when warranted will keep them passionate about their work as the business grows.
Starting a business is clearly not an easy endeavor, and there are many reasons why some fail while others succeed. Sometimes it’s purely about economics — a weak economy, lack of demand for the product/service, or competition that can do the job cheaper. More often than not, however, the strength and stability of a workforce is critical in determining the success or failure of a company — and this is especially true for small businesses. Given the influence employees can have on a company’s fate, investing in them — literally and figuratively — is one of the smartest moves a small business can make.
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