A strong company culture is vital for small businesses. You need it to achieve higher employee retention, respect for your brand, and overall success. According to a recent survey, 67% of executives prioritize company culture, and you’ll find an average of 2.5 million references to culture annually in leading business magazines.
What is Company Culture?
Technically, there’s no standard definition of company culture. However, it can be described as the glue that holds a business together or the backbone of a brand. Company culture can be seen as how employees buy into a way of doing business and treating customers, serving as the foundation for success in the small business world.
The Role of Company Culture in Small Businesses
The difference between a thriving and failing business can be minuscule, and your company’s culture can be why your business succeeds or flames out. Small businesses have a better opportunity to foster a great company culture than larger entities, and they must take advantage of that.
As a small business, you only have a small group of people who need to align with the actions and behaviors that support your message. In contrast, larger companies typically face challenges or take decades to build a winning culture—if they manage to do so at all.
Develop core values that tell the story of your brand and implement policies that align with those values and beliefs—essentially guiding how employees conduct themselves both within the company and toward customers.
The Benefits of a Strong Company Culture
A strong culture can have many benefits for your small business, such as the following:
- Higher employee retention
- Increased productivity
- Improved customer satisfaction
- Enhanced innovation
- Stronger brand reputation
Employee turnover can be costly and a strong company culture will reduce that by not only attracting but also retaining top talent for the long haul. Engaged employees are more productive and willing to go above and beyond their job requirements to deliver the best products, service, and customer experience possible. This leads to higher customer satisfaction and positive word of mouth.
A company culture that encourages creativity and risk-taking can enhance innovation, making you an industry leader or go-to source. All of this adds up to great brand recognition, reputation, and respect, which likely leads to increased sales, profits, and satisfied customers.
Strategies for Building a Strong Company Culture
First, you should define your company’s core values by articulating your vision and mission. Then choose employees who understand and believe in this mission while leading by example with their behavior, work ethic, and values.
After that, it’s important to foster a sense of community within the company by building camaraderie and setting goals for your workers to shoot for. Recognize and reward employees for reaching those goals both as a team and individually. Also, there should be significant opportunities for growth and development as well as a focus on work/life balance.
Instances of how Successful Small Businesses have grown with Strong Cultures
According to this Deloitte study, 94% of executives and 88% of employees believe a distinct company culture is essential for success. A strong company culture reduces turnover and boosts hiring due to referrals from existing employees.
Also, when employees love the company they work for, it becomes contagious, and that filters out to customers and makes them more passionate and loyal to the brand.
According to Forbes, ‘Satisfied employees are more productive, and a positive work culture attracts and retains high-caliber talent, ultimately leading to increased revenue. Conversely, neglecting company culture can result in disengaged team members and attrition rates, leading to significant financial losses.’
In 2023, companies on the ‘100 Best Companies to Work For’ list had a stock performance of almost four times better than the market. Ryan Giannotto, manager of equity index research at the London Stock Exchange Group, says, “What this analysis shows is that looking at different criteria on evaluating companies like the 100 Best — based on employee experience and culture — can make a difference in stock performance.”
According to Business Leadership Today, employees who rate their company’s culture as either good or excellent are nearly 800% more likely to be satisfied at work, while employees who feel their company’s culture is poor or horrible are 83% more likely than others to have one foot out the door. A positive company culture leads to more productivity, profits, revenue generation, and overall great feeling within the company.
Zappos is known for providing excellent customer service and thriving due to its company culture. The company offers employees perks such as exercise classes, free snacks, and a dog-friendly office policy. They also promote career advancement and growth within the company.
The retail company was founded in 1999 after the founder had a bad experience at a department store and now has an annual revenue of just under $600 million.
Overcoming Challenges in Building a Strong Company Culture
Every business, large or small, faces challenges, especially when developing a company culture. Common obstacles include limited resources, resistance to change, or conflicting personalities.
When starting a small business, you’ll likely have limited resources to do everything you need. However, you can still promote a strong company culture with the right leadership. If your business has been around for a while, employees might be set in their ways and resistant to change. However, providing small incentives like leaving early on Friday or once-a-month pizza parties if they meet certain goals can help with that.
Also, it’s almost inevitable that you’ll have conflicting personalities within your company. In that case, you can look for common ground among team members by learning more about them to help bridge gaps. One way to do this is by organizing common ground sessions, which can be a pow-wow between workers that brings a topic they’re both interested in to discuss. Whether it’s music, sports, travel, or food, just a small spark of common ground can mean wonders.
Culture in Action
As a small business, your company’s culture is paramount to your brand. You can’t rely on big names, fancy commercials, or deep pockets that hide mistakes. Implementing a strong company culture will set you up for short and long-term success.
Setting distinct core values, hiring people who lead by example, and encouraging open communication can build a positive work environment. Also, building a sense of community and providing growth opportunities while recognizing employees for their accomplishments are all part of what makes a strong company culture. This will likely reap the long-term benefits of having a respected brand, loyal customers, a happy workforce, and an increased bottom line.
Now that you understand the value of building a strong company culture for your small business, you can take action to achieve positive results.
