How to Choose a Holiday Bonus for Your Staff as a Small Business Owner

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Are you giving the staff at your small business a Christmas bonus this year? Many small business owners struggle with deciding exactly how to share the spirit of the holiday season with their teams — and very often they also struggle with figuring out how to pay for these extra one-time-a-year expenses.

How can we give our staff a holiday bonus that doesn’t break the bank, while also making them feel appreciated? It’s hard to decide as Christmas bonuses in small businesses can range from a catered lunch to decadent weekend getaways. What will you give?

Things to consider when deciding on a Christmas bonus

  • Staff expectations
  • Budget
  • Giving system

Staff expectations

Depending on the type of business you own, there may be a set expectation in your field for how much you should give for bonuses. In corporate businesses, a payout structure for bonuses can be 3% to 5% of the annual salary. And then, there are some jobs where the majority of the employee’s income is from bonuses. These bonuses are more than the 1-time holiday bonus we are talking about here, but this goes to show how bonuses can vary widely from field to field.

Then there is your company culture regarding bonuses. How often do you talk about Christmas bonuses in your small business? Have you been giving the same bonus consistently for the last couple of years? What culture have you created around holiday gift expectations?

Openly communicate your holiday bonus plan with your staff. If people assume they will be getting a big bonus, but your budget doesn’t allow for that, it’s going to cause friction. You can even take suggestions for bonuses earlier in the year to gauge people’s expectations and desires.


Small business owners are the most generous people I know and without safeguards in place there’s a possibility to over-give. Which can turn this holiday season from a time of celebration to an anxious, debt-inducing experience.

This is why it’s so important to track your money. When you monitor your profits and pay yourself a consistent and decent salary, it’s easy to know what you have left to give. If you’re prone to over-giving, delegate holiday planning to an employee. Give them a fixed budget and guidelines for how you want the company to give back.

If you can’t decide what to give or how much to give, it can help to look at your company values. For example, Systems Business Coach® values small businesses and their owners. So if I wanted to give my staff a gift card as part of their bonus, it would make sense for me to give a gift card to a local business over a big box store.

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Giving system

When I owned my travel agency, I remember one Christmas when we were hit with yet another travel disaster and sales were very low in the months coming up to the holidays. I ended up cashing my own paycheque and using that money to give each of my staff members a small cash bonus. In the years prior to that, I had easily been able to give them several hundred dollars each in a bright red envelope. This particular year, however, things were very tight.

I hadn’t planned ahead for the bonuses my staff were expecting and once it was time for me to give something to them, I didn’t have it. That’s because I didn’t have a system for giving. I had a few new staff as well, so I had to think about what amount would be fair based on how long they had been with my company. The following year was better and I had the money. But I still had to spend hours trying to determine who would get what all over again.

The time to plan for a holiday bonus is now. I encourage you to plan NOW for next year as opposed to this year. Take this opportunity to write down your holiday-giving system.

Things you may want to consider in your holiday bonus system are:

  • Your company’s profit for the previous fiscal year.
  • Will you give a cash bonus, a party, both or neither?
  • Create and document your formula for determining the bonus.
  • Add a budget line for this starting now so that funds are available in 2023 when you need them.

What will your small business give as a holiday bonus?

Share your ideas big or small for giving to your staff and supporters at Christmas in the comments. I’d like to hear your thoughts!

Until next time, enjoy your Entrepreneurial Journey!

Beverlee Rasmussen e-signature

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