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Writer's pictureEric Williams

Employee Count and Perceived Business Risk: Key Considerations for Small Businesses

The fewer employees a business has, the riskier it can seem to potential buyers. For instance, in a business with just five employees, team members are likely handling multiple roles. This multitasking can impact effectiveness since it’s challenging to excel in areas like bookkeeping, purchasing, and marketing without dedicated focus on each.


Employee turnover is another significant risk. In a five-person company, losing one employee represents a 20% change in staff, whereas in a 20-person company, it’s only a 5% change. Cross-training employees is an effective way to minimize this risk, as it ensures continuity by enabling others to cover key tasks if an employee leaves.


An operations manual can also help make a small business more resilient. By documenting each role’s tasks in detail, you create a clear guide that makes it easier to maintain consistency and train new staff. This step-by-step manual not only helps with employee transitions but also strengthens the business by standardizing operations.


For companies with limited staff, outsourcing certain core functions can further reduce risk. Using vendors for tasks like payroll, bookkeeping, and marketing provides stability and ensures these essential functions are covered, allowing the core team to focus on daily operations.

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