Small business onboarding process: Best practices and 5 mistakes to avoid

When you’re a new small business owner or manager with limited time on your hands, your goal may be to make your onboarding process as quick and simple as possible.

Your first instinct may be to have new hires spend a couple of days filling out paperwork and going over your policies and procedures, and then have them start working with a supervisor right away so they can learn everything they need to know on the job. At face value, this kind of onboarding process seems like it’ll be efficient and minimally disrupt your work and responsibilities.

Here’s the thing: A short onboarding process may seem like the best way to save time, money, and get your new hire in the swing of things right away. But it’s more likely to lead to high turnover rates and training costs in the long term. And it’s probably why only 12%* of employees think their employer does a good job with onboarding.

An impactful onboarding process takes preparation, time, and ongoing training. This guide will discuss:

• How a solid onboarding process can impact your business
• Five steps for successful onboarding
• Five mistakes to avoid in the onboarding process

*Forbes, 2022

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What is onboarding?

Employee onboarding is the process of educating and familiarizing your new hires with their role and responsibilities, as well as your business and culture overall. It also involves completing basic HR and compliance tasks like filling out and signing tax forms and paperwork.

A typical onboarding process happens over four phases:

1. Pre-onboarding procedures
2. Welcoming your new hire on their first day and introducing them to your business and team
3. Your training program
4. Working with a mentor and then transitioning into working independently

Why is the onboarding process especially important for small businesses?

The onboarding process takes time, which is an extra-precious commodity for small business owners. But it’s worthwhile because a well-planned onboarding process can help you prevent foreseeable mistakes and long-term employee burnout, helping you build a strong, committed team. Here’s how.

Lower turnover rate

You may try to avoid high turnover as much as possible by hiring employees who look good on paper and perform well in an interview. Your reasoning might be, “If I hire smart, solid employees, I won’t have to spend a lot of time onboarding them and can focus my attention where it’s really needed.”

But did you know that a good onboarding experience can increase your retention rate by as much as 82%? This is because employees need more than a couple of weeks or a month with their employer and their training materials to get a handle on their new role. They need you and your entire team working together to ensure they’ve absorbed what they’ve learned from your policies, procedures, and training materials.

They also need ample time to practice new skills and tasks before they’ll be ready to work independently. That’s why, to help avoid high turnover, we recommend a three-month onboarding period.

Reduced training costs

In 2020, small businesses with between 100 to 999 employees spent around $1,678 per employee on training. But let’s say you only have 15 employees and you pay them about $25,000 in wages each. You should multiply that number by one to three percent to estimate your yearly training cost per employee, which means you should spend at least $250 per employee.

But imagine that a third of your employees leave after working for you for only a couple of months. That translates into spending more money on training, not to mention wasted time and resources. That’s why it’s essential to invest in your new hires with a solid onboarding program. And while some turnover is unavoidable, you can reduce the number of employee departures and job hoppers by empowering your new hires with the knowledge, skills, and confidence they need to stick around.

Stronger company culture

It’s hard to develop a rich, dynamic, and fun company culture when you have employees constantly coming and going. You alone can’t be the face of your business and culture — to grow and improve your company, you need great employees committed to making your business an attractive, enjoyable place to work during the onboarding process.

Without a strong team, it’s hard to onboard new employees. And without a strong onboarding process, it’s hard to build a strong team.

Avoid the vicious cycle. Make your onboarding process strong from the get-go.

5 steps for successful small business onboarding

A thorough onboarding process can help you create a thriving business and team culture, but how can you actually put one together? Here are the five steps we recommend following.

1. Be prepared

Even though we suggest spending at least two to three months on your onboarding process, be sure to use that time as productively as you can. That makes mapping out the onboarding process crucial.

Every onboarding process should have four phases and incorporate the 5 Cs:

• Compliance
• Clarification
• Culture
• Connection
• Check back

The four phases will help you structure your onboarding schedule and the 5 Cs can act as a checklist to guarantee your onboarding is thorough and comprehensive.

So, before your new hire’s first day you should:

1. Send them their welcome packet and ask them to e-sign and submit all necessary tax forms and documents.
2. Ask them to read your employee handbook.
3. Send them the onboarding schedule so they know what to expect for the months ahead. If you require every new hire to complete an employee probationary period, let them know at this point.
4. Give them a brief overview of what you’ll cover in your training program.

2. Put your company culture on display

Your company culture is what sets your small business apart from others. But you may be tempted to gloss over it during onboarding and wait for your employee to experience it first-hand. You may think it’s better that they decide if they’re a good cultural fit.

It’s a much better idea to be transparent, enthusiastic, and communicative about your business’s values and culture. That way, candidates and new hires won’t waste anyone’s time training for a job where they likely won’t last, especially if your values clash.

To showcase your company culture in your onboarding program, be prepared to talk about your:

• Commitment to diversity: Do you emphasize inclusive work practices for everyone regardless of their race, gender, sexual orientation, ethnic background, or religion? Do you empower your employees to express themselves openly in a way that’s appropriate for work? Being explicit about this ensures you build a safe culture for everyone.
• Values: Talk about your commitment to things like transparency and communication, respect and fairness, teamwork, flexibility, and a growth mindset. You should also discuss how your team members should demonstrate those values in a practical way, with real workplace examples.
• Unique benefits: Do you offer health insurance, paid time off (PTO), transportation, or childcare stipends?
• Rewards and recognition program: How do you celebrate employee achievements and milestones on a consistent basis? Do you offer rewards like extra PTO, freebies, or discounts?

3. Make sure you have an established training process

It’s true that most employees prefer to learn on the job rather than in a formal training program where they’re sitting and listening without practicing on their own. Still, it’s not ideal to throw your new hires into the deep end during week one of training hoping they’ll learn everything as they go. New hires need a balance of formalized training and hands-on experience.

Here are some brief steps you can take to design your training process and schedule:

• Talk to your current staff members about what you should cover in your training program: They know first-hand what it’s like to work for you and will be able to identify things that were missing from their own onboarding experience.
• Decide on a few core goals to focus on in training: For example, if you’re training a new server in your restaurant, you could:
  • Focus on safety and compliance in week one
  • Train them on front-of-house procedures in week two
  • Go over the basics of customer service in week three
  • Train them on your restaurant technology in week four

• Create your training schedule: Plan out each day of your training schedule by using a visual planner or calendar and send it to your new hires.
• Prepare all your training materials: Whether you’ll rely on audio-visual presentations, slide shows, or a Learning Management System (LMS) to run your training, decide which formats and materials you’ll focus on and when.

4. Provide feedback and be willing to receive it

Your new hire is going to rely on you, their employer or manager, for honest feedback during the training process. But depending only on spontaneous feedback throughout onboarding might overwhelm the employee or make them anxious, especially if they don’t know when to expect it.

It’s better to use a structured feedback process. Here are a few examples of how you can do that:

• Plan a regular, in-person feedback session at the end of every week of training. This can be a two-way conversation where you offer your suggestions for improvement and listen to your new hire’s input.
• Use your team communication app to send your new hire structured feedback at the end of every day. This way, they’ll also get acquainted with your team’s communication method.
• Plan a review session with the business manager, owner, and new hire at the end of every month to discuss strengths, weaknesses, and what should be prioritized for the next month.

Remember: Feedback isn’t a one-way street. Make space for your new team member to offer their input so you can create a more successful onboarding process for the future.

5. Offer ongoing training

As an owner or manager, aren’t you constantly learning new things about how to run a business? Wouldn’t it be helpful if you received regular training? Well, your employees need ongoing support and training for the same reasons.

Here are some ideas to help you integrate ongoing training into your business:

• Create a mentorship program for new employees after they’re done with onboarding: This could last another one to three months, depending on the role. Just remember to follow up with your mentors and mentees regularly to check on their progress.
• Offer monthly, all-hands employee training on a specific topic: You could cover new products or services, customer service tips, or technology training.
• Hold monthly “lunch-and-learn” sessions: Purchase lunch for your team and have them watch a training video or review something they learned during onboarding.
• Send your employees training videos. If you have certain training materials that aren’t too long or involved, team members may be willing to give them a quick watch when they’re off the clock.

5 common small business onboarding mistakes

As you perfect your onboarding process, you’ll quickly learn that slip-ups and missteps are integral to the process. Here are a few common onboarding issues, so you can keep them in mind and prevent them from happening before they come up.

1. Starting the process too late

Waiting for a new hire’s first day to start their employee onboarding paperwork wastes valuable time you could be spending going over rules and procedures, discussing your culture, and introducing them to their new team. It also sends the message that you’re unprepared and not serious about creating a great onboarding experience for them.

Start your onboarding process before your new recruit walks through the door by sending them a welcome email that details when and where they should show up, as well as what their orientation schedule will look like. You should also send them the required paperwork and have them sign it electronically instead of on paper.

2. Using a “one and done” approach

Don’t expect to onboard employees on their first day and be done with it. The length of your onboarding process will vary based on your industry, but it should take two to three months to complete. This is because you need plenty of time to cover:

• Expectations and responsibilities
• HR process orientation
• Staff introductions
• A week-to-week training program focused on specific goals
• Your new hire’s initial performance assessment
• Ongoing training after onboarding
• Employee feedback on the process

3. Overwhelming new hires with too much information

It’s typical for new hires to feel overwhelmed, even if you get a few things out of the way before the first day. If you try to cram everything into a two or three-day orientation session, you’re still leaving your new employee to navigate their day-to-day responsibilities on their own and rely on more experienced teammates to answer their basic questions.

Instead of dumping all your onboarding information on your new hires at once, spread your orientation activities out over at least a week. That way, your new employee will have time to digest the basics before they start your more intensive training program. Make sure you also include all your orientation information in your employee handbook so new recruits have resources they can review on their own time.

And after your orientation period is over, don’t forget to set up a check-in meeting to answer any questions new employees may have.

4. Failing to set expectations

When employees don’t know what’s expected of them, it can lead to frustration on the job, resentment, burnout, and eventually, even resignation or termination. Staff members need to know exactly what “good” looks like for your business. That’s why you should spend a large part of the onboarding process explaining the ins and outs of the job to reduce confusion and frustration.

Make your expectations crystal clear to your new hires and let them know how you’ll evaluate their performance. Will you offer feedback at the end of every training session or at the end of every week? And be explicit about how often you’ll do employee performance reviews.

5. Forgetting about feedback

Your onboarding process may seem successful from your perspective, but how did your new employees find it? Feedback is essential because it helps you identify areas of your training that new hires found confusing, a waste of time, or unproductive.

You should survey your new hire about the onboarding process after they’ve finished their first 90 days. Ask them what worked, what didn’t work, and where they felt they could have used more or less support. Take a good look at their feedback and consider making changes where needed so your process can be more impactful in the future.

Avoid common onboarding mistakes with Homebase

Onboarding new employees is challenging because it involves a mixture of administrative, human resources, compliance, and operational know-how. It also takes creativity and strategy to get it right.

That’s why we recommend using onboarding software. While an onboarding platform may not be able to help you brainstorm the best way to structure your onboarding program, it can help you take care of a lot of administrative work and back-and-forth communication.

And when you streamline your onboarding process with a solution like Homebase — which was designed for small business owners who are inexperienced with HR and onboarding — you get access to a user-friendly platform that can help you:

• Find candidates quickly and easily:. You can use our pre-written, customized job description templates to create your own job description. Then, you can post your job to multiple job boards, including ZipRecruitier, Craigslist, and Indeed — all for free.

• Find the best talent: Once the applications start rolling in, Homebase can track candidate status, filter out ineligible applicants with screener questions, communicate with top candidates, and set up interviews.

• Get your onboarding paperwork done before day one: With Homebase, you can sidestep the blunder of starting your onboarding process too late. We can automate the whole thing and make it paperless. And as soon as you send your new employee a job offer, we’ll send them a welcome packet with their required forms, tax documents, and any additional documents you’d like to include.

• Stay compliant: After your new hires e-sign their paperwork, we’ll securely store all their personal details and information for you, which you’ll need in case you get audited.

Get your new hires off to a good start with Homebase

Small business owners and managers want to create the best employee experience possible. But a great employee experience starts with the first interactions your new hires have with your business — like the onboarding process. And putting together a top-tier onboarding system takes time, strategy, collaboration, and fine-tuning.

Homebase can help, and not just with the onboarding part. We can also:

• Simplify your scheduling with our free scheduling software

• Make team communication and feedback a breeze with our free team messaging app

• Track time and automate your payroll set up with our free time clock tool

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FAQs about onboarding for small businesses

What should be included in an onboarding checklist?

Your onboarding checklist should include five key elements, which are sometimes referred to as the 5 Cs of onboarding: compliance, clarification, culture, connection, and check back.

You can use these five Cs to create a more detailed onboarding checklist. For example, in your onboarding, make sure to go over the following:

1. Employee paperwork and documents, like tax forms and your employee handbook  
2. Your business rules and policies
3. The new hire’s role and responsibilities, including detailed training
4. Your business values, plans, and objectives for the future
5. An introduction to your business partners, managers, and coworkers
6. Your communication system
7. How you give and receive feedback
8. How and when you’ll check back with the new hire to see how things are going

What does every new employee need to know?

During the onboarding process, every new employee needs to know:

1. Your policies and procedures, including how to stay safe on the job, when they’ll get paid, how they should ask for time off, and how they’ll receive their schedule.
2. What a normal day on the job looks like and how they’ll accomplish their tasks.
3. Your business values and plans for the future.
4. Who they’ll be reporting to and who they’ll be working closely with.
5. How they’ll communicate with their teammates and managers.
6. Your process for feedback and honest communication.

What does a good onboarding program look like?

A good onboarding program starts the moment you hire your new employee. The first thing you should do is send them their new hire packet and paperwork so they can read it, sign it, and send it back to you before their first day on the job. Sending paperwork right away isn’t only helpful for compliance purposes — it familiarizes your new staff member with your business and procedures before they start.

A good onboarding program should also:

1. Be well-organized and follow a structure: You can’t just wing it and take each day as it comes. Every day of your onboarding process should have a specific learning goal.
2. Take about 60 to 90 days: You need time to cover everything and to make sure the new hire has absorbed all the information.
3. Clearly define your expectations: Make sure you explain clearly to your new employee that by the end of the onboarding process, you’ll expect them to have a handle on their role and be able to work independently.
4. Involve feedback: Let them know you’ll make space for offering feedback to your new hire and receiving their input along the way.