Not having sufficient cash flow can be incredibly stressful, especially when you have to pay annual bonuses. You can still recognise performance and save face without having to fork out a lump sum at the end of each year. Here’s a suggestion how.
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Finances are the lifeblood of any business. Not having sufficient cash flow can be incredibly stressful. This is especially apparent when you need to start paying annual bonuses, something which many businesses do at the end of the year.
This adds additional stress for most business owners as it is not always something you would have made provision for. It can be incredibly stressful on an already strained cashflow, especially when other businesses don’t necessarily want to invest in your products or services at the end of the year. (Not to mention the matter of VAT which would have just been paid over to the tax man in November).
Related: 11 Tips to transform a crisis into an opportunity
Bonuses are an important form of recognition
An important lesson that I learnt some years ago, which really helped manage finances during bonus payment cycles of year and to keep head above water, was to change when annual bonuses were paid.
Performance bonuses are paid during the team members birthday month. In that way, you can plan finances a lot better throughout the year and you don’t need to pay a lump sum of bonuses at the end of the year.
Each month I engage with each of the team members, and we ascertain what is working, what is not working and based on their performance aligned to their job specs, I commit to saving a twelfth of their salary if they have really shone and over delivered during the month.
In that way, when it is their birthday they have a thirteenth cheque to look forward to; thereby personalising their contribution and making sure that they are recognised for their hard work throughout the year. I hope this advice helps you.