As the year draws to a close, are you haunted by thoughts of salary increases for next year?

Whether it’s salary bumps, bonuses, or cost-of-living adjustments, deciding how to reward your team requires careful consideration.

Before conjuring up any numbers, let’s dive into the key factors to help you make the right decision!

🧛 Financial Health: Can Your Cash Flow Survive the Bite?

  • Budget & Cash Flow – Look into your crystal ball and cast a spell over your 2025 books! Make sure your projected cash flow for 2025 can sustain salary increases—no skeletons hiding in your budget closet!
  • Profit Margins – Consider how payroll hikes will impact profit margins? You don’t want to suck all the blood out of your profits by increasing payroll costs. Keep profit margins   healthy always for your business to thrive.
  • CFO guidance – Consult with a fractional CFO who can conduct scenario analysis to see if implementing pay increases will keep you flying high or put your business in the graveyard.🪦 If the thought of increasing payroll costs makes a fractional CFO or your consultant scream, then that’s an indicator it’s not a good idea.

🎃 Individual “Boo”-ster Circumstances

Sometimes a single standout deserves extra recognition:

  • Tenure & Experience – Long-standing “angels” on your team might warrant a boost based on their dedication.
  • Performance Review & Goal Achievement – Use performance reviews to reveal which employees are the real “wizards” driving the business and the “goblins” stunting business.  Those who hit their targets and exceeded goals may be up for a raise.
  • Acknowledge without increased pay – Promote those who’ve leveled up their skills, taken on extra responsibilities or continuously conjure creative ideas that support your business goals.  Perhaps you can just elevate their title and give a cost of living adjustment instead of making a more permanent move to increase salary. No tricks, just treats for these valued players!

👻 Other considerations that can make salary raises a spooky or spooktacular move

  • Legal:  With rising calls for pay transparency, protect yourself from getting “tricked” on the compliance front. If you’re contemplating disclosure, an HR consultant or employment attorney can help keep you in line with the latest spells and regulations around pay practices.
  • Economic Conditions – Is the economy playing tricks, or can your business handle treats in the form of raises?
  • Future Projections – Peer into the future: are you forecasting growth or bracing for potential downturns?

🍬🍭Other tricks or treats

Salary increases are just one potion in the mix! There are other ways to use your magic to bring employees under your spell. Make them part of a broader “charm” to retain your most valuable team members.

  • Work-Life Balance Initiatives – You can offer employees access to or supplement the cost of wellness programs (e.g. gym memberships, mental healthy days or workshops).  You can expand PTO days and offer a flexible hours schedule.
  • Recognition – Consider implementing employee awards or recognising publicly those employees who have helped meet/exceed certain metrics important to the business (e.g. sales, marketing metrics etc).
  • Foster Positive Culture – Organize team-building activities and create opportunities for employees to participate in community service initiatives.  You can also provide PTO for volunteering.

🧙Good rituals to practice 

Whether you decide to invest more in your employees or determine it’s just not in the cards this year, communicate transparently. Share why you’ve made the decision and how it aligns with your company’s goals and values.

Last but not least, involve a strategic financial business advisor and an HR consultant in any decisions regarding employees.  I and my fractional CFOs help our clients model out the financial implications of different scenarios to guide the CEO in making a final decision. Making people decisions, without considering the financial implications, is like driving with blinders on.

Consult with a fractional CFO who can perform scenarios analysis to see what will positively impact your 2025 performance. Our Financial Choreographer is ready to support you. Are you ready?  If so, Schedule a Financial Consult.

Happy Halloween! 🕸️

-Tricia

Tricia Taitt is the CEO and Chief Financial Choreographer of FinCore. She holds an M.B.A from The Fuqua School of Business of Duke University, and a BS in Economics with a Finance concentration from The Wharton School at the University of Pennsylvania. For over 20 years, she’s been a finance professional. Half of the time was spent working on Wall Street while the other half was spent in the trenches side by side with small business owners. As a result of working with FinCore, clients have been able to take control of their numbers and feel more confident in their ability to make decisions, while increasing profits by 10% and building a cash stash to invest in growth. Follow Tricia on LinkedIn and Instagram.

If you’re ready to see what our team of CFOs can do for your small business, Schedule a Financial Strategy Session.