Small business owners, what's your views surrounding salary increases?

[bigboy529]

Hi all
I want to find out from small business owners with a couple of employees what your views are surrounding salaries and increases, how you deal with it etc.

Every business has monthly running costs or overheads and salaries form part of these overheads. Each month your first target is essentially to cover your overheads for the month and the money you get in after that can be used elseware, but first priority will always be to pay what you have to pay to keep the business going and that includes your people.

At which point do you decide that there's now enough money for salary increases and essentially making your monthly overheads more, at which point do you decide that there will be enough next month?

Do you save up for a couple of months to be sure that you can carry those increases for the next few months should something go wrong or should there be a slow month?

Or do you simply force yourself to give salary increases come hell or high water and work it in to the budget, for example a minimum increase to make up for inflation once a year?

 

[Idiosyncratic]

Or do you simply force yourself to give salary increases come hell or high water and work it in to the budget, for example a minimum increase to make up for inflation once a year?

^This is me. Has almost killed some of my ventures in times past, but money in the bank is usually money that'll get used... Storing money for increases is easier said than done.

 

[bigboy529]

^This is me. Has almost killed some of my ventures in times past, but money in the bank is usually money that'll get used... Storing money for increases is easier said than done.

I'm also leaning towards this, fixing a date and minimum percentage once a year to at least make up for inflation. If there's more for bigger increases then fair enough, but that minimum stays in place and should be worked towards and planned towards.

"One day", "if there's enough money" etc, etc almost never realizes because there's always something else, something seemingly more important, salary increases can wait till next month/time etc.

 

[Idiosyncratic]

"One day", "if there's enough money" etc, etc almost never realizes because there's always something else, something seemingly more important, salary increases can wait till next month/time etc.

Exactly

 

[werfie]

Actually, as a small business, your entire operation is reliant on your few employees. You simply cannot afford (no pun intended) to sit with demoralised emoloyees whose earnings can't keep up with even inflation. They will be negative and that damages your business or they will leave. Losing skills and investing in training new staff is often also something small businesses can't afford. In my mind this shouldn't be a question. Giving employees an increase of inflation annually should be non negotiable. If your business will struggle to do even this, you are in trouble and need to assess your operation.

Keep increases linked to inflation and rather provide bonusses on good performance of the business. You don't want to increase salaries with double digits one year cause the year was good and then less the next. That will make employees negative as well.

7% seems to be a happy inflation related medium.

 

[SauRoNZA]

I've received my biggest and more relevant increases from small business as well as bonuses because it's much easier to prove your worth and get credit for good performance than in a larger enterprise.

If you need to scrape the barrel to pay salaries then one has to wonder why run a business at all?

 

[Purply]

We always put away all extra money,regardless the amount, as you tend to get those really SLOW months that can bite you in the ass, especially when stuff starts breaking or you urgently need to buy something expensive to finish a new project to secure even more income.

Yearly price increase is essential at that in essence should cover all staff increases. In small business the happiness of your staff is of utmost importance, without them you can land in hot water very fast and lose huge chunks of income in the long run due to clients leaving because of bad service.

We reward our staff with performance bonuses when we get extremely busy, but also when extra surplus cash is available, on top of the already 6 + months worth of operational cash saved up.

Treat your staff to pizza, a braai or whatever small things when you can, as that alone boosts staff moral a lot.

Don't forget to keep your staff healthy by always having medicine at work, be it headache,flu,cold,inflammation,sore muscles,hay fever tablets ect ect that's key to keeping production going with the least amount of sick days.

If for reasons unknown money is tight and salaries can't be paid on time, or increases can't be paid, you should probably start reevaluate your business strategy and whether you are indeed going in the right direction. But always pay your staff first, suppliers can wait and so can the owners.

 

[^^vampire^^]

Another side note that seems to completely elude most small business owners. If you can't afford to pay your staff don't tell them on the day they are expecting to get their salary. Happened to me about 10 years ago. Wasn't a problem for me as I was young and had no financial obligations but some staff had to literally phone the bank that day and explain why their bond payment was going to bounce.

Happened to my GFs mom last month too. Owner just said sorry there's no money, I will try pay you but too bad you're all without a job.

 

[Idiosyncratic]

Another side note that seems to completely elude most small business owners. If you can't afford to pay your staff don't tell them on the day they are expecting to get their salary. Happened to me about 10 years ago. Wasn't a problem for me as I was young and had no financial obligations but some staff had to literally phone the bank that day and explain why their bond payment was going to bounce.

Happened to my GFs mom last month too. Owner just said sorry there's no money, I will try pay you but too bad you're all without a job.

It's easy to see it like that, but then there are some cases where the business owner did his best to try and get the money but couldn't...money that was expected isn't money in the bank. Particularly in small business (although I recently sat in the office of a large one with the same issue), it's definitely not an infrequent occurrence for owners to sit a few days before payday and wonder where they're going to get the funds to pay everyone. This happens a few times to 90%+ of startups (every venture I've ever been involved with and every business owner, small or large, I'm friends with testifies to the same fact). If everyone had to get rid of their staff before something like that happened "to play it safe", most businesses wouldn't exist and most individuals in this country wouldn't be employed. If you had to warn employees every time, morale would be so low you could effectively close your doors.

Just shedding light on the issue from a different angle. Still a terrible situation to be in - nothing changes that.