Christmas bonus for small business with 2 employees and declining sales

★★ signal-medium r/smallbusiness · ↑ 89 · 💬 97 · 2025-12-02 · kw: slow moving inventory · open on reddit ↗

Tool

POS system

Issue

Small business owner with 2 employees facing 11% YoY sales decline (down 9% prior year) while maintaining 5% annual raises, 4% 401k match, and 1% Christmas bonuses; struggling to sustain employee benefits amid revenue pressure.

Cost

11% gross sales decline YoY; specific dollar impact unstated but owner reports difficulty sustaining current benefit structure beyond next year

Recommendation

Maintain bonuses/raises to preserve employee loyalty and trust; consider transparent communication with employees about financial situation; scale bonus percentage (e.g., 0.5-0.75%) rather than eliminate; frame as gift not performance-based compensation

Date context

2025-12-02; Christmas bonus decision cycle; January 1 raise effective date

extracted with

anthropic/claude-haiku-4.5 · 2026-05-08

Body

Here's some info about the business: I own a small business with 2 employees. I give 5% guaranteed annual raises that kick in on January 1. I also provide a 401k match of up to 4%. In the past Christmas bonuses have been 1% of wages earned for the year. The bad news is that gross sales are down about 11% this year. They were also down around 9% last year. I've absorbed the costs and have kept the increases and benefits. Not sure how much longer I can hold out. It's only for 2 employees though so I think I can continue with the above for another year. How are other small business owners navigating bonuses/raises/benefits as your sales continue to decline? Edit: Just to clarify, the employees have done everything asked of them. They show up, shut up, and keep up. They work hard and are reliable. They are professional and polite. Even though the business is going through a downturn I am having trouble with the idea of withholding something from them that they are not responsible for. I understand bonuses are performance based, but their performance hasn't diminished. It's just people out there are struggling. And for those that are telling me to focus on sales, I've definitely tried a few things this year. I switched to a new POS system that better tracks customer behavior and sends reminders for increased engagement. I've offered more sales. The employees have changed displays/endcaps every month as well as getting rid of slow moving SKUs and replacing them with new products. I have gone through every expense and tried to find a way to lower overhead costs. Sometimes the economy just sucks and the free market puts you in your place. So this is less about a "bonus" and more about being a "gift."

Top comments (5)

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[score=116] [deleted]

My husband and I own a company with 10 employees. Some years we do really well some years not so much... they get their bonuses regardless. I would go out of pocket to pay their bonuses because they work so hard all year. It's my responsibility to make sure that the business does well enough and if I set the precedent for bonuses I keep giving the bonuses. This might be the last year you give them bonuses but they should get their bonus. Because it's only two employees this should be a really easy decision for you.

[score=29] Strong_Teaching8548

in my experience you're already doing better than most small business owners in decline, you've held raises and benefits steady shows real commitment to your team, which builds loyalty when things turn around I think the ones who survive downturns don't cut everything at once. they get transparent with their teams instead. have you actually sat down with them and walked through the numbers? most employees would rather know "hey, sales are down 11%, here's where we're at" than suddenly lose benefits or bonuses. transparency keeps trust intact for the bonus specifically, i'd consider scaling it to revenue rather than eliminating it entirely. even 0.5% keeps the gesture alive without breaking you. you could also frame it as "this year we're adjusting to 0.75% given revenue, but if q1 picks up we'll revisit." people respect that more than silence the real question: do you see a path back to growth, or is this the new normal? that changes everything about what's sustainable :)

[score=7] Additional-Sock8980

How are profits? Gross sales is vanity. Did the employees meet their KPI’s? Are the KPI’s for their bonuses correctly aligned?

[score=6] plausible-deniabilty

I would eat the bonus/raise again this year and have that talk in January about what the future looks like. A short term monetary loss but long term employee good will.