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7 Things You Need To Know Before Creating An Employee Handbook

7 Things You Need To Know Before Creating An Employee Handbook

Starting your own business is a difficult venture. You have to take care of a plethora of things and even then success is never guaranteed. Only after you go through several trials and tribulations, and learn from your experiences will you finally be able to carve your name in the world of entrepreneurship. In this world, the one who perseveres is the one who survives.

Employees are the part and parcel of any company. Having employees on board is one thing; making them follow your lead is entirely another. The success of a company is engrained in the ability of the employers to manage their employees. Discipline, work ethic, professionalism and dedication are vital components of a well-run organization. All these requirements are encapsulated in an employee handbook that is generally unique to a company. An employee handbook guides all employees on how to behave and conduct themselves in the realm of an office space. Basically, it is a summary of the organization’s policies and regulations.

The following are some of the things you should know before you write an employee handbook. Mind you, these are just guidelines to help you with the writing process. Writing the perfect employee handbook is an art in itself. You cannot simply conjure an all-encompassing, well-written handbook out of thin air. In fact, it takes years of experience, effort and constantly updating yourself with the times to write the perfect one. As always, practice makes perfect.

1. Why do you need an employee handbook?

All companies have policies––formal or informal––that dictate the terms of employment and expectations from its employees. Having clearly defined policies in one document creates an easily accessible record for the company hierarchy.

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For new employees, you may use this handbook to easily introduce them to the company’s rules and regulations. With an employee handbook, you don’t need to run around telling everyone how to behave in the office.

2. A handbook can protect you in court.

Running a company is not easy work. There are a thousand things that can go wrong, and sooner or later, you might even have to be in a court battling a disgruntled ex-employee. Say, he files a case believing he didn’t deserve to get sacked –– you might have to take the blame for someone else’s wrongdoing.

The same laws may not be universally applicable, or there may be distinct laws based on the nature of your business. Having a hard copy of your company’s rules and regulations is. therefore, vital as everything you want to address will be established in writing. Further, if you do not have the policies deemed necessary by legislation, you could be prosecuted and fined.

3. “Must have” handbook provisions

There are many indispensable provisions that must be included in your handbook. Some of these are related to the well-being of the employees. Violence and harassment in the workplace are inexcusable and must be forbidden.

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A company must include an occupational health and safety policy. Human rights is another issue that has been in the spotlight for several years now. The latter two policies are absolutely necessary, especially in the construction industry.

4. “Good to have” and other handbook provisions

Your employee handbook can cover an extensive scope of policies that sometimes may include some unorthodox policies as well. They may be out-of-the-box, but addressing these policies may sometimes be crucial for the functioning of your company.

Say that two employees fall in love at work and start exhibiting public displays of affection much to the chagrin or amusement of other employees. This may affect the overall performance of the company and having a policy on such issues can firmly draw the line between work and personal life.

Privacy, computer and internet policy, work attendance, overtime, pregnancy, etc. are some other policies which may be instrumental to the company’s operation.

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5. Remember, it’s only a guide

Sometimes, an employee handbook may be misinterpreted as a contract statement. But unless you want it to be treated so, it is better to explicitly state at the outset that the handbook is not intended to be used as a contract document.

This is critical, like in the case of employment-at-will, which means that the boss can fire an employee at his will for any reason (except discrimination or other exceptions). Every now and then, you might want to exercise that power to let people off whenever you want.

But, if your handbook specifically lists reasons for termination, without proper disclaimers, these may be considered as the ONLY legal base for termination, if the handbook is considered a contract.

6. Communicating your employee handbook

As mentioned above, a handbook can help defend your company in a court case. But if an employee can somehow prove that they never saw or read a copy, the court can’t help you at all.

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So, make sure that all your employees have read and agreed to the terms written down in the handbook. Ask them to sign a statement saying that they have done so and also notify them in case of any updates or new additions. A meeting to review policy changes will also serve well.

Make your handbook pleasing to the eye and easy to understand, avoiding jargon wherever possible. Title it unconventionally if you want; this is your company’s handbook, not a lesson in literature. Use one that will engage your employees and articulate your company’s culture right away.

7. Consult an employment attorney

As your company grows, and your handbook incorporates a wide range of policies, it may become tedious to update these policies regularly. Not to mention, when your company opens a branch in a new part of the country, it may require new policies in accordance with the jurisdiction there.

These laws may sometimes be overlooked, which can have serious implications for the company. Having an attorney comes in handy in these situations. And these employee handbooks should be reviewed at least once every two years.

The times change fast, and updating these policies regularly may be the key to your company becoming the next big thing or languishing in bankruptcy.

Featured photo credit: Wikipedia via upload.wikimedia.org

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Nabin Paudyal

Co-Founder, Siplikan Media Group

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Published on September 28, 2020

9 Essential Tips for Starting Your Own Business

9 Essential Tips for Starting Your Own Business

Starting your own business is the dream of every would-be entrepreneur. While it is a huge undertaking, the rewards of owning a business have proven to be worth it for millions of people all over the world. In this article, we will talk specifically about how to start your own business and how to make it successful.

We have all heard the statistics about the high failure rate of new businesses:[1]

  • Roughly 20% of small businesses fail within the first year.
  • Roughly 33% of small businesses fail within two years.
  • Roughly 50%of small businesses fail within five years.
  • Roughly 66% of small businesses fail within 10 years.

As these numbers suggest, starting a business and having a successful business are two vastly different things. Knowing how to start your own business the right way can mean the difference between long term success and failure.

There is an old saying that people don’t plan to fail, they fail to plan. There is a lot of truth to this. Starting a business is more than just coming up with a good idea and jumping in. You need to have a plan for success, and that means you have to know how to set and achieve goals.

From the time you get that (Eureka!) moment up until you open the doors, every decision you make will impact the business. So, it is important that you carefully evaluate every aspect of your business.

1. Evaluate Yourself

The cold hard truth is that good business ideas are a dime a dozen. Realistically, the chances of your idea being so unique as to be revolutionary are slim to none.

This does not mean that you should abandon it. It just means that you will need to do more than just bring it to the market. The phrase “If you build it, they will come” works better in movies than real life.

Be Honest – Doing honest self-evaluations are notoriously difficult. Humans just are not particularly good at accurately evaluating themselves.

Here is a quick little experiment you can do with any group of 10 or more people. Ask them to hold up a hand if they know how to drive a car, virtually 100% of hands go up. Then, ask them to keep their hand up if they are better than average drivers. 90-95% of hands stay up.

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So, what does this tell us?

Because it is statistically impossible that everyone is “above average”, it illustrates the phenomenon called the “Dunning-Kruger Effect,” which is a cognitive bias in which people wrongly overestimate their knowledge or ability in a specific area. This tends to occur because a lack of self-awareness prevents them from accurately assessing their own skills”.[2]

Because of this Dunning-Kruger Effect, it can be helpful to consult others about what they see as our strengths and weaknesses. Just assure the person that you are interested in their actual opinion and you won’t be hurt or offended if they give it to you.

Some of the things you will want to include in your self-evaluation:

  • Are you a self-starter? Unlike being an employee, there will be no one standing over your shoulder telling you what to do or when to go to work. If you are someone who requires a lot of structure, starting your own business may not be the best option.
  • How organized are you? Planning and organizational skills are important, especially in the early stages of launching a business. Entrepreneurs that “fly by the seat of their pants” rarely succeed.
  • How do you handle risk and failure? The fact of the matter is, going into business is a risky proposition. Success is never guaranteed. Smart business people take calculated risks, but they are still risks. If you are someone for whom the thought of failure or losing money would be devastating, entrepreneurship is probably not for you.
  • How well do you get along with people? How are your communication skills? Most of us consider ourselves “people persons”, but business owners take communication to an entirely new level. When starting out, the business owner is a jack of all trades. You need to be able to interact with clients, business partners, industry partners, suppliers, staff, accountants, lawyers, regulators, and a host of others both accurately and decisively.
  • How disciplined are you? Resilience and perseverance are two of the biggest factors that will determine your success. As we stated earlier, mistakes will be made and some of them will be costly. You need to have enough resilience and perseverance to continue getting up after being knocked down. The only sure way to fail is to give up.

If you are satisfied that you have what it takes to become an entrepreneur, it’s time to move on to the next step.

2. Evaluate Your Business Idea

Again, being able to honestly evaluate your own business idea is key. However, this step is generally not as hard as the self-evaluation because the criteria used in the evaluation process is more objective than subjective.

Identify your target market – Who are the people that will be buying your product or service? For this step, it’s important to alter your mindset. Instead of thinking like a seller, start thinking like a customer.

Can you articulate answers to the following questions?

  • What is the problem addressed by your product or service?
  • How does your product or service solve that problem?
  • Why is your solution better than the competitions’?
  • Are people willing to spend money on a solution to the problem?

You will also want to gather as much information about the people in your target market as possible. At the bare minimum, you will want to know the following about your potential clientele:

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  • Age
  • Location
  • Income
  • Gender
  • Occupation
  • Education
  • Marital Status
  • Ethnicity
  • Number of Children

All of this information will help tweak your product or service to better suit their needs. It is also helpful in developing a marketing strategy.

3. Evaluate the Competition

Generally, you can divide your competitors into three categories:

  • Direct competition – These are companies that offer the same products or services to the same target market as your business. You can think of Burger King and McDonald’s as direct competitors.
  • Indirect competition – These businesses will offer products and services that are similar to the ones you provide without being the same. Another type of indirect competitor can be one that markets the same product or service, just to a different clientele or market segment. Subway and McDonald’s would be indirect competitors.
  • Substitute competition – These are businesses that offer different products or services to the same clientele in the same market segment as you. An example of substitute competition for McDonald’s would be the local mom and pop diner.

Once you have identified exactly who your competitors are, you will want to gather the following information:

  • What is the range of products and services they offer?
  • Are they expanding or scaling down their business?
  • How long have they been in business?
  • What do customers see as their positive/negative attributes?
  • Can you identify any competitive advantage they have?
  • What is their pricing strategy?
  • What is their advertising/marketing strategy?

The purpose of the analysis is to identify your competition’s strengths and weaknesses to better compete.

For example, if your competitors sell largely to companies with more than 100 employees. You may decide to target smaller companies with less than 100 employees. This means that your pricing and marketing strategies will need to be more in line with what the smaller companies expect and can afford.

4. Evaluate the Financial Feasibility of the Business

In developing a financial feasibility analysis, you need to have answers to the following questions:

  • What will it cost to get your business off the ground and become profitable?
  • What initial expenses will you have?
  • What ongoing expenses will you have?
  • What is the source of your start-up capital?
  • What is the earning potential of the business, and how long will it take to achieve?
  • How will you keep the business open and pay your bills until it becomes profitable?

Once you have this information in hand, you will need to build in an extra “cushion” for all of the extra “surprise” expenses that pop up. Additionally, most people are overly optimistic when it comes to estimating the profitability of the business and the time frame needed to achieve it.

How much of a cushion do you need? No one can say for sure. Some people will tell you to double or even triple your estimates. At a bare minimum, you should add 50% to the estimates you made.

It can be disheartening to learn that your business idea really is not financially feasible, but it’s much better to make that discovery now rather than after the money is spent.

5. Have a Professional Business Plan

If you haven’t done so already, get yourself a professional business plan. When I say “professional,” I don’t mean that you need to go out and hire someone to do it. I mean that you need to know what a professional business plan looks like and take it seriously.

Too often, new entrepreneurs neglect to create a business plan in favor of flying by the seat of their pants. This is not a good strategy. Without a plan, you won’t know where you are headed.

“It can seem a daunting task when you’ve never been faced with writing a business plan before, but it’s a crucial task which will enable your venture to start and continue on a solid foundation. A business plan is also necessary when you’re looking to secure funding or investment. Essentially, a business plan is your vision for how the business will run, what you expect to achieve, and how you will achieve those things.”

-Mike Gingerich[3]

6. Use Common Sense Money Principles

Successful start-ups keep a tight rein on expenses. As an owner, you should know exactly where every penny is spent. In all businesses, expenses tend to go up over time. But in the initial stages, you can count on having more expenses than income.

In the earliest stage of being a startup owner, you will deal with an array of challenges. You have to familiarize yourself with the selected business landscape and look for options to expand the business venture while saving the operating costs.

During this time-frame, trimming the operating costs is not optional; defacto is a matter of life and death for your startup. You can’t keep moving in a specific direction. It is mandatory to drift your business towards one goal with smart planning.

7. Start With a Narrow Focus

All too often, I see new business owners get into trouble by overreaching their goals. What happens is that people take on work outside their expertise.

For example, a website designer will take on a client who wants SEO optimization in addition to the design

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Assuming that the web designer is not an expert in SEO, there are several potential problems with this scenario:

  • Pricing – Without knowing or understanding the scope of SEO that’s involved, the chances of underestimating and losing money on the project go way up.
  • Quality – They may be the greatest web designer on earth, but that’s still only half of the job. Clients rightly expect the entire project to be done right.
  • Reputation – There is no second chance for a first impression. These first projects need to be done well if you want any chance of referral business. They will also determine if your first few clients become repeat customers or not.

Remember, Amazon started out just selling books. They slowly expanded their business until you can now get virtually anything on their site.

Be like Amazon. Start with a narrow focus and expand from there.

8. Search Out and Use Specific Resources

There are a lot of free resources out there that every new business owner should take advantage of. They are a great source of information, help, and most importantly, networking opportunities. Some of these resources are general, while others are targeted to specific types of entrepreneurs. Both are worth checking out.

Here’s a partial list of resources:

  • The Chamber of Commerce – Their slogan is, “Designed for business owners, CO—is a site that connects like minds and delivers actionable insights for next-level growth.”
  • U.S. Small Business Association – They offer free business consulting services, SBA guaranteed business loans, certification for federal government contracting, and more.
  • Women’s Business Club – It is specifically for women to network and exchange ideas, but it also useful if you are marketing specifically to women.
  • BLACK ENTERPRISE – Similar to the Women’s Business Club, Black Enterprise is designed specifically for African American entrepreneurs. They bill themselves as, “The premier business, investing, and wealth-building resource for African Americans. Since 1970.”
  • Hispanic Small Business Resource GuideThis guide is filled with resources and networking opportunities for the Hispanic entrepreneur.

9. Just Do It!

Okay, I borrowed the phrase from Nike, but it’s good advice. It not only means taking concrete steps to start your business but also to get out of your own way.

A lot of entrepreneurs (and regular people) are afflicted by a condition called analysis paralysis. It is when someone overthinks about a decision too much that a choice never gets made, resulting in inaction.

If you are a perfectionist, you need to be especially careful of analysis paralysis. Perfectionists tend to wait until everything is perfect before launching their business, and many never get off the runway.

Final Thoughts

Accept that you will make mistakes, that you won’t make the right call all of the time, and that unforeseen obstacles will always pop up.

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If you are truly committed to the entrepreneurial lifestyle and your business, then take the plunge. The goal isn’t to be perfect, but to build a business that changes lives.

More Tips on How to Start Your Own Business

Featured photo credit: DISRUPTIVO via unsplash.com

Reference

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