The secret to small business success: Develop people early

Based on the U.S. Small Business Association’s (SBA) definition of small businesses as independent organizations with fewer than 500 employees, there are over 33 million small businesses in the United States. This accounts for 99.9% of all U.S. firms, employing almost half (46%) of America’s private sector workforce. By all standards, small businesses play a crucial role in the U.S. economy and job market.

That’s why it’s important to be aware of the many challenges and opportunities small business owners and managers face today. Indeed, data from the Bureau of Labor Statistics indicates that 20% of new enterprises shut down within their first year. While many businesses experience initial success, only a select few thrive in the long run. Of the businesses that commenced in 2012, only about 35% were still operational in 2022, meaning only a little over a third of those celebrated their 10-year mark. So what separates companies that “make it” from those that don’t? While there are too many variables to offer one formula for guaranteed success, one thing is certain: How you view and treat your most valuable asset — your people — is a deciding factor.

As a small business owner or manager faced with a seemingly never-ending list of competing priorities and pressures, it can be tempting to sideline people processes and strategic HR decisions to the bottom of your to-do list. However, taking your people for granted is a critical mistake. Not only because they are your most valuable asset but because deprioritizing people enablement is counterproductive to commercial success. Nurturing and empowering team members isn’t just about being a “good” company; it’s about building a foundation to fuel your growth, help your business stand out from the competition, and accelerate your success.

Why early people enablement is essential

Many early-stage small businesses fall into the trap of thinking they can deprioritize HR processes and people enablement. But having these elements in place from the beginning saves valuable time and money — the cornerstones of long-term business success. Companies that prioritize their people early on set themselves up for consistent, efficient, and sustainable growth. According to Gallup, disengaged employees cost an additional $3,400 for every $10,000 salary. So, it’s not just about hiring the right talent; it’s about developing, engaging, and retaining them.

Strategic HR: Starting points for small businesses

Whether you’re leading an early-stage startup or a local small business, four strategic pillars define your team and business growth. Invest in getting these right from day one, and you’ll develop, engage, and retain a high-performing team — equipped and motivated to drive continued success and sustainable growth for years to come.

• Strategic alignment: Aligning your entire team, especially in the early days when agility is critical, can make or break your business. Setting clear expectations about company direction, business objectives, and key performance indicators (KPIs) is a must — as is real-time progress tracking. Transparent communication, rigorous documentation, and efficient meeting management ensure that every team member is focused on shared objectives, avoiding costly misunderstandings or duplicated efforts.
• Performance management: For a small business, each team member’s performance has a magnified impact on the company’s trajectory. Integrating performance reviews, competency frameworks, and regular feedback sessions cultivates a culture where growth and learning are intertwined with daily operations. Short feedback loops mean quick iterations and moving fast.
• Employee engagement: A motivated team isn’t just more productive; they’re your best advocates. Anonymously capturing feedback helps leaders address concerns head-on, creating an inclusive environment where everyone feels their voice is valued. Structured and consistent 1:1 meetings between managers and employees help build psychological safety, trust, accountability, and action in any areas of concern quickly and effectively.
• Learning & development: A small team often results in employees wearing many hats. An effective learning and development strategy, mapped with competency frameworks, ensures that team members are equipped with all necessary skills, pushing individual and company growth. Depending on the business size, this does not need to be very sophisticated or take up many resources.

Practical next steps

Now, let’s get even more specific and, most importantly, practical. If you’re thinking of starting a small business or are in the early days of running one, there are five questions you should ask yourself or your team to lay a strong foundation for business longevity.

• Performance: How will we define, measure, and manage employee performance?
• Development: How will we define and document competency frameworks and career progression?
• Engagement: How will we track employee engagement and gain continuous insights across the entire employee lifecycle?
• Feedback & recognition: What can we do now to engrain feedback into the culture long-term? For example, can we build cultural rituals that encourage feedback and boost performance?
• Goals: How will we set and track company, team, and individual goals?

Answering these questions is half the battle. The other half is usually finding the right tool to integrate these processes. The more consolidated and interconnected your chosen tool, the better. Your career progression frameworks, for example, should inform performance cycles, goals, and feedback.

Read more: How small business owners can craft the right benefits package

While there’s no silver bullet to success, no amount of funding and no groundbreaking product or service can replace the value of a motivated, aligned, and skilled team. Small businesses are uniquely positioned to embed these values and processes right from the start rather than retrofitting them later. It’s not just about saving time and money in the long run; it’s about establishing a resilient organizational culture that can weather economic turbulence because it thrives on growth, feedback, and continuous learning.

Jenny von Podewils, co-CEO of Leapsome