If you love beer and wine, the thought of opening a liquor store is one you’ve probably considered on more than one occasion. While many industries have suffered in recent times, the liquor industry is still going very strong.
The global market revenue in 2022 is estimated at $1,810,873 million, while research into recent trends shows that people have shifted towards drinking at home gatherings rather than social occasions due to the COVID-19 pandemic. There has arguably never been a more exciting time to enter this business.
So what do you need to open a liquor store in 2022? Read on for all the answers you need.
Why Owning a Liquor Store Appeals to People
Before starting any business, you must first be sure that it is the right venture for you. Otherwise, you will inevitably struggle to maintain the motivation needed to establish the brand and achieve sustained success.
Aside from the general appeal of becoming your own boss, the following perks are what makes working in the alcohol industry great:
Flexibility - you can open a wine store, a convenience liquor shop, or even sell alcohol as a section of a larger grocery store.
Ongoing demand - while there is a spike during the festive season, alcohol sales remain high all year long.
Product/brand recognition - you can stock brands that consumers are already familiar with. This can subsequently make marketing a lot simpler.
Recession-proof - like running a food truck business, this venture won’t suffer as much as other businesses due to broader economic issues.
Online selling - in addition to your brick-and-mortar venue, a liquor store business can switch to online sales easily.
In truth, there are many other reasons to start a business of this kind. The products appeal to millions of adults, boast a long shelf life, and don’t require huge storage space. Meanwhile, you probably already have a good understanding of the products and will enjoy learning more about them. The knowledge that you’ve helped enhance social lives is also hugely rewarding.
The Cost of Opening a Liquor Store
Before even looking at the finer details of a business plan, you must first check the financial viability of opening a liquor store. The harsh reality is that it’s not cheap. Moreover, it’s the initial outlay that is most likely to pose a major stumbling block.
The expenses that you will face during the pre-launch and early phases of running the business will include:
Acquiring a liquor license, which will cost several thousand dollars.
Finding a store to let, which can again cost thousands of dollars.
Renovations to the store, including racking and shelving as well as decor and new POS terminals.
Inventory, which is likely to cost anywhere from $20,000 to $50,000.
Marketing costs that may cover branding materials, website building, and covering the local marketing channels.
Overall, it is not uncommon for business owners to spend $100,000 on launching the liquor business. Following this, you can expect to keep spending thousands of dollars each month on staffing, marketing, and running the premises. Of course, any stock you sell will need to be replaced, too, so you have to factor in resupply costs as well.
You can reduce some of the costs of opening the business by finding an existing liquor store for sale or an opportunity to open a franchise instead of your own brand.
Steps to Opening a Liquor Store
If you're wondering how to start an alcohol business venture, perhaps the most important tip is to ensure that no stone is left unturned. With the right action plan and strategy in place, you can tap into the multi-billion-dollar industry easily.
Here is a list of the top tips that can help you in the process of opening your alcohol store.
Complete the Necessary Market Research
Before you can open a liquor shop business, you must understand the marketplace you are about to enter. Checking state and national industry statistics will be crucial while you should also take some time to analyze what is already available in your location.
As well as knowing what’s available, you need to think about the gap in the market you’ll exploit. With this in mind, you need to consider the target market too. Some of the key questions to ask include;
Who are the people buying the alcohol?
How do they buy alcohol - online, offline, convenience store?
How often and what quantities do they buy liquor in?
Understanding the industry will help you set realistic expectations and learn how the profitable business sector can build you a brighter future.
Write a Business Plan
A business plan is a legal document that will subsequently help you with funding and gaining liquor store permits. Crucially, it is an item you can return to time and time again throughout the planning phases for guidance.
You can find business plan templates online, including solutions specifically for alcohol distributors. It should cover these key aspects:
Your mission statement and purpose for the business.
Relationship between the target demographic and the product.
Details of your operations and management plan.
Design plans for products, services, and branding efforts.
Financial projections for at least the short and mid-term goals.
A solid business plan will become one of your most valuable assets because it can help establish trust from investors while also giving employees a clear action plan and brand identity.
Find the Right Location
The right location is one of the most important things to consider when opening a liquor store, not least because it will have a huge influence on foot traffic and overall liquor store income levels. Even if you plan to sell online too, a prestigious location and strong reputation in offline circles will aid the cause.
There are several factors to consider at this time. Ask yourself the following questions for guidance;
Is it close to residential areas? Because over 45% of all searches are now local and consumers looking for liquor stores near them will provide a lot of your visitors.
Does the venue offer good public transport access and ample parking?
Is it in close proximity to other venues that people may visit before or after wanting alcohol? If so, this can have a significant impact on your visitor levels.
The right location may additionally open up drive-thru liquor store options, or at least the potential to provide a curbside pick-up service. Similarly, it may enable you to provide local deliveries directly to your customers without losing too much time or money,
While you won’t confirm the venue just yet, creating a shortlist of ideal locations and anticipated costs will serve you well going forward.
Focus on Funding
The harsh reality is that your business idea won’t go any further if you do not have the funds to get it off the ground. As already stated, you may be looking at a bill of over $100,000 to launch the company before tapping into any potential liquor store profit.
There are several ways for creative entrepreneurs to raise funds. Some of the most popular include:
SBA loans or business loans for bad credit.
Private investments from local or national investors.
Crowdfunding from friends, family, and other interested parties.
Personal loans or selling assets.
Federal or state business grants.
The most important thing is to analyze all of the options. After all, a lack of capital is often the reason why one in two ventures fail within five years, so make sure you are well prepared, and not just for the opening few months.
Form a Legal Entity
Forming a legal entity is one of the most important requirements to open a liquor store. It is not possible to start trading until you have completed this step. The main types of entities that you are likely to consider are:
A sole proprietorship, where the business is solely owned by you.
A partnership between two or more liquor store owners.
A Limited Liability Company (LLC), which works as something of a hybrid between a partnership and a corporation.
A corporation, which is a legal entity established to conduct particular types of business.
Entrepreneurs looking to open liquor store businesses will often choose a sole proprietorship or an LLC depending on individual circumstances. Speaking to a dedicated legal advisor or lawyer is the best way to make the right selection for your business needs.
When forming your legal entity, you’ll also want to consider the name of your company. Remember that the name of your liquor store can be the same as the brand name, but it doesn’t have to be.
Get Your Bank Account and Licenses
How much does a liquor store make? It doesn’t matter if your business doesn't have a bank account to conduct transactions or a license to sell alcohol. Securing a bank account with a business credit card will require a visit to the bank with your ID and Employer Identification Number (EIN). As s liquor store, you’ll need a physical address, which shouldn’t be a problem since you’ll need a property anyway, unless you plan on selling online only.
As for licenses, you will need to check state and national regulations. To complete this phase, your state’s Alcohol Beverage Control Board will determine;
Who can be served and who can serve alcohol.
The times during which your business can operate.
The limits on prices on the volume of alcohol sales per customer.
In addition to the liquor store permits, you may need to consider special licenses for online sales.
Organize Your Finances
A liquor store has high start-up costs, and you will encounter a lot of transactions (income and outgoing costs) once your doors open. As such, keeping your finances organized will be vital. To get this right, you’ll want to complete a range of steps. These include:
Finding a suitable accountant with experience in supporting liquor store businesses.
Putting insurance in place - including Liability and Liquor Liability Insurance, data protection coverage, and Workers’ Compensation Insurance.
Managing your invoices, expenses, operational costs, and projected financials.
Just because you have funding doesn’t mean you don’t need to spend your capital wisely. Besides, good organizational skills enable your liquor store business to have a great headstart and enter the market, creating a profit in record time.
Establish Your Marketing Strategy
Branding and marketing are essential features of every business model. An alcohol store isn’t any different. After cementing your brand name and choosing the right color scheme and logo, you must establish the best marketing strategies to help your business thrive in the industry.
When dealing with Pay-Per-Click (PPC), the cost per click in the alcohol industry is higher than in other industries. Insight like this should help you decide where and how to promote your company. Some of the options you’ll need to consider are:
Shop signage to attract foot traffic.
A strong website and SEO plan to attract local online traffic.
Social media campaigns to raise awareness and show the brand image.
Shop layouts and staging of products.
Local media placements and ads.
Referral marketing and recommendations.
The great news is that many of the products you stock will already be supported by extensive marketing campaigns from their manufacturers. Perfect your branding skills, and you’ll be rolling in cash, too.
Set your Prices
Setting the prices is an essential step for your business. You need to find the sweet spot between healthy profit margins and keeping consumers happy. In most cases, markups will be around the 25-40% mark. However, a convenience store's prices will likely differ from those in a wine store, so bear in mind the type of shop you’re planning to open.
Crucially, you’ll need to divide all beverages sold into four categories:
Standard branded liquors.
Premium liquor brands.
Your liquor shop business will probably run special promotions on a regular basis, but knowing your general pricing before opening the doors will be key to having a strong start.
Build Your Team
When opening your alcohol store business, a lot of the success will depend on having the right around you. In fact, you’ll have already embraced the support of experts like accountants, lawyers, market researchers, bank managers, license vendors, and web designers by this stage. However, you’ll still need the most crucial aspect for the success of ongoing daily operations - the employees.
Workers may include floor workers, cashiers, customer care experts, in-house marketers, drivers, and more. You will want to keep the numbers as low as possible due to their salaries and bonus costs like healthcare and 401K contributions. When hiring employees, be sure to test their;
Knowledge of the alcoholic beverages industry as a whole.
Knowledge of their specific job role and the tasks within it.
Personality traits and alignment with your business philosophy and goals.
A winning team won’t only represent your alcohol store in an effective way but will help your business grow and prosper.
Stock Your Inventory
As mentioned above, stocking your inventory could account for up to $50,000 right at the start of your business journey. Therefore, managing it well is one of the most important steps to opening a liquor store, and for that, you’ll need a good Point of Sale system. It should be able to:
Track all stock in real-time,
Compile reports of all sales and automate purchases.
Give clear info for managing order fulfillment.
In addition to the right stock management system, you should ensure that the liquor store is protected by insurance. This will help prevent losses caused by bottles dropping off the shelves or shoplifting. Naturally, a sound security system should be installed for further peace of mind.
Prepare for the Opening
By now, you will have:
Satisfied all legal requirements.
Built a winning brand and designed your store logo, layout, etc.
Financed the liquor shop business.
Found a winning team of employees.
Stocked your business with the right products.
All that’s left is to arrange your big opening. Use this as an opportunity to build excitement for your new company, and local drinkers will quickly check out what your business has to offer. We’ll raise a glass to that!
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Opening a liquor store business does require hard work and a significant investment. When done well, though, it is one of the most stable industries to be involved in. Crucially, a combination of online and offline sales will enable you to achieve significant profits for immediate and long-term success.
If you are passionate about alcohol and running a business, there has never been a better time to start.
By Danica Djokic ·
The popularity of candles is arguably greater than ever, and most consumers are now open to supporting independent brands in this field. So, if you’ve been thinking about how to start a candle business over the past few years, this may be the perfect time to finally do it.
A quick look at the industry supports this idea; it was worth $3.54 billion in 2019 and is forecast to hit $6.64 billion by 2027. Moreover, it’s a surprisingly accessible sector to join, as long as you have passion, talent, and a winning strategy.
That’s exactly what this guide to starting a candle business in 2022 aims to do. The road to turning your burning passion into a reality starts here.
Why Choose a Candle Making Business?
Like any other business idea, starting a candle company requires a significant investment of time, money, and passion, so you need to be sure that it’s the right venture for you. This means analyzing the prospect of selling candles rather than just the benefits of being your own boss.
There are many reasons why you may wish to work in this business sector, starting with the growth that it’s currently experiencing. Other factors include;
Earning potential - as far as the business model is concerned, a candle supply business is quite impressive. The products are cheap to make (and send), while the markups are also healthy.
Mass appeal - candles are used in 7 out of 10 US households. This makes them one of the most commonly used home products of all, not least because most people use multiple candles each year.
Stability - candles are inexpensive yet make a difference to our lives. As such, their sales don’t typically get affected by economic downturns, which is very important in the current situation.
Year-long appeal - while there is a spike in sales during the festive period (unsurprisingly given that both men and women like them as gifts), two-thirds of candle sales are non-seasonal.
Easy start - once you know how to make DIY candles, the process is quite simple and doesn’t require large volumes of equipment. In fact, many startups in this field begin as home-based ventures.
Furthermore, the candlemaker community is quite supportive. There are more than enough customers to go around and small business owners can often connect with each other in mutually beneficial business relationships.
If you already love candles as a consumer, you already know the type of products that you’ll love - it’s likely that others will too. When combined with the right business methods, you can’t go too far wrong.
What Does it Cost to Start a Candle Making Business at Home?
The opportunity to start the company at home is one of the most attractive options for many reasons, such as the opportunity to establish a healthier work-life balance or even launch the venture as a side hustle before eventually leaving your day job to go full-time. Crucially, it also removes one of the largest costs. Since 64% of businesses start with only $10,000 in capital, it’s obvious that you don’t need an obscene amount of money to get going.
Low costs are an attractive feature of running a small candle business, yet you’ll still need to consider the following overheads:
The costs of registering your business for tax purposes.
Candle supplies like wax, wicks, and molds.
Double boilers and other candle production equipment.
Increased energy bills at home.
Branding and marketing costs, which should ideally scale up with your success.
Overall, most home candle businesses will look at somewhere between $1K and $5K to get started. However, those who want to work from a commercial setting will need to factor in rent, insurance, and potential staffing fees. The most common estimate of the cost of starting such a business is $44,000.
How to Start a Candle Business in 10 Steps
If you’ve been searching for “how to start my own candle company in America,” the great news is that it’s probably a lot simpler than you think, although it will require a lot of effort, as is the case with any venture.
Whether you have experience making candles for friends or are completely new to the field, the following tips will serve you well.
#1. Fund Your Candle Making
Before even launching the business, you’ll need to buy yourself the essential candle making equipment. This includes products like wicks, as well as the necessary tools. Most people can fund this through personal investments or by selling a few unwanted items first.
If you plan on making candles to sell, you may eventually face some additional costs. Even if the venture becomes profitable at an early stage, you’ll need to maintain your cash flow. Some of the options include:
Bank loans, including business loans for bad credit.
Crowdfunding from friends, family, and online supporters.
SBA loans and business grants.
While you may not need to access funding until some of the subsequent steps have been completed, it’s important to understand the situation in advance.
#2. Become a Better Candle Maker
For a candle business to thrive, it will rely heavily on repeat customers. Spoiler alert; they’ll only continue to buy your products if you provide quality. Before selling, it’s essential that you learn to create the best possible products. If you wouldn’t be happy buying the product yourself, it’s not ready for the market.
Research has shown that more than 10,000 scents are available in the US, while the vast majority of consumers state that fragrance is a very important factor in their selection. Some of the other key aspects to consider include:
How long it burns for and whether that matches the stated duration.
The price and the perceived value for money.
How far the scent spreads across the room.
The consistency of the candle and whether it stays in one piece.
Practice makes perfect, which is why you should have fun with different scents. There’s nothing quite like unlocking a new winner, and even the losers will help you perfect the craft of actively making candles. You may also consider candle making classes before transforming the hobby into a commercial venture.
#3. Research the Market
Over one billion pounds of wax are used to create candles in the US each year. However, that doesn't mean all companies or consumers are the same. Even if you think you’re pretty good at making candles, you also need to understand the mechanics of the industry. Otherwise, you’ll be left with little more than an expensive hobby.
When considering how to sell candles, you must first define your target market. Generally speaking, your products will fall into one of three categories:
Mass-market products, which can range from tealights to budget-friendly candles like those often seen in big retail stores. Traditional scents feature heavily.
Mid-market, which may include combinations of scents while also featuring a higher quality of packaging. In some cases, they’ll promote eco-friendly or vegan aspects.
High-end, which are premium products that are likely to be found in boutiques or prestigious homewares stores. The brand and the scents are luxurious.
The costs of making (and packaging) the candles will increase through the three markets. However, the selling prices will follow suit. You’ll need to weigh up the pros and cons of each, taking the local marketplace and any current gaps in the market into account.
#4. Create Your Candle Business Plan
Building a robust business plan is one of the most significant steps you’ll have to complete. This is true for every business ranging from food truck companies to candle companies. A business plan is a document that can help you when seeking funding. It also makes life a lot easier when it comes to hiring people.
Most importantly, it turns your initial ideas into a vision and strategy. The business plan should:
Outline your objectives and goals.
Determine the strategy needed to reach those targets and overcome challenges.
Review the ideas to see whether they are viable to make a profit.
List the resources and equipment required.
Business plan templates are readily available. With a little research, you’ll find one that helps you consider the stages of how to start a candle business. If nothing else, the detailed plan gives a clear outline that you can follow with confidence.
#5. Register Your Candle Business
When looking at how to sell candles, the great news is that you don’t require a license. This means that technically you could start making and selling your products immediately. If you’re only selling a handful over the course of a year, it’s more of a hobby. However, if you’re selling products with the aim of turning a profit, you’ll need to register the company.
Most people starting a business entity will choose to be a sole proprietor at this stage. However, there are some factors to take into account at this stage.
Your state may have local insurance demands for all SMBs.
Securing your Employer Identification Number if you plan to hire workers.
Using the National Candle Association cautionary fire safety label.
Setting up a business bank account.
Overall the legal requirements for selling homemade candles are fairly limited, especially when using non-hazardous wicks and waxes. In this case, you won’t even be required to list ingredients on the product packaging.
#6. Build Your Brand
Building a brand that stands out from the crowd will be one of the most significant steps in getting your business started. Choosing candle company names is a great starting point; it’s something you probably would’ve considered during the business plan and registration elements.
Your brand will also need to encapsulate why and how you’re making candles, as well as who they are for. Some of the issues you’ll have to consider are:
Which fragrances you’ll produce and whether they could be broken into categories like “natural scents” or “fruit scents.”
The brand’s standing on social responsibility, because two-thirds of customers want to stand with companies that share their views.
A brand story that people can relate to - your backstory is vital as a small startup that’s focused on DIY candles.
Visual elements such as the logo, packaging color schemes, web store layout, and related elements that make your candles instantly recognizable.
The biggest candle company is Yankee Candle. While you cannot copy or emulate this famous brand, you can certainly gain some ideas about how to tell a brand story and how to sell candles in a way that users know will improve their lives.
#7. Work on Making Candles to Sell
Even at the start of your journey, you would have naturally thought about how to make candles that sell. The scents and the general branding elements are crucial. However, there are over 400 well-known candle manufacturers in the US. To secure your place in the market, it will be necessary to ensure quality in every aspect of the venture.
Some of the additional options you may wish to consider are:
Making soy candles for profit. These are totally renewable and organic, and they also burn longer, which can appeal to eco-friendly users. A CAGR rate of 8.5% should not be overlooked either.
Decorative candles. These can be created in a plethora of unique designs. While some users may burn them as usual, many will leave them as ornaments for the home. A wide range of shapes and colors can be created with care.
Vegan candles. These are made without beeswax and use animal-free materials instead. The plant-based waxes are usually coupled with natural scents to fit in with the brand.
It should be noted that you could look at tea lights or other alternatives. When you’ve selected the type and material you want to work with, you’ll find tutorials with ease.
#8. Assemble a Winning Team or Network
As the owner of a homemade candles business, you’d be forgiven for thinking that you need to go it alone, at least until you’ve built a larger following. In reality, you may still need to work with others, even if you don’t hire them directly.
Candle making businesses aren’t just about crafting the candles and packaging them up nicely. You’ll also need to consider these people:
Suppliers who provide the materials for creating candles, as well as the packaging materials.
Branding experts and freelance marketers who can bring the business to life.
Couriers or delivery services.
Accountants or legal experts, particularly during the pre-launch phases.
Furthermore, your network of other small businesses and other candle companies can be very useful. Whether you’re working together, trading skills, or sharing resources isn’t important; what matters is that you don’t have to face the world of business alone.
#9. Market Your Candle Making Business
When you first open your doors, it’s unlikely that you’ll need an advanced online store. In fact, you can run your candle business on Etsy, where the number of active buyers nearly doubled between 2019 and 2020 and continues to grow at a rapid rate. While they won’t all be in the market for candles, it is a great way to open yourself up to a huge online audience.
Meanwhile, you’ll find that local sales can generate a lot of your business as a new candle seller. To make the most of this, you can;
Use social media to the max by placing local ads and interacting with customers.
Ask friends and family to spread the word - the power of recommendation is incredible.
Attend local community and trade events.
Ask to stock items in other local stores for a small fee.
Introduce subscription boxes.
If you’ve already worked on your brand and done some market research, you’ll have a good idea of how to get your products in front of the right people. Assuming that the pricing model and product quality are up to standard, you should see stunning results.
The above candle business tips should help you prepare to open your doors with either one or a few scented candles. However, you can’t afford to rest on the laurels of your initial success. Growing the company is the only way to make it a permanent business venture.
No two candle businesses will follow the same path. However, you could look at the following options:
Creating new scents to increase your catalog.
Trying different materials and wax types.
Opening a brick-and-mortar store or a dedicated online store.
Creating accessories and other items linked to candles.
It may also be possible to turn the company into a franchise. This will help the brand grow, and you’ll also take extra profits through commissions or franchising fees. It’s a long-term ambition but one that you should at least consider when starting your homemade candles business.
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The Final Word
By now you should feel quite confident about how to start a candle business in 2022. If you know your audience and can create products that smell and look the part, your hopes of success should be quite strong. Not least because a product that costs you $5 to make could easily sell for three or four times that value.
Build a solid audience and there’s nothing to stop you from earning thousands of dollars in year one, followed by significant growth in the years to follow.
By Julija A. ·
It is never easy to tell an employee that you no longer want them to work for your firm. Behind every commercial decision, there’s a living, breathing human being, with bills to pay. Moreover, every employee has rights, meaning that you could be putting yourself at risk of liability if you get the termination process wrong.
In this post, we explain how to fire someone, what you should say, and give some examples of best (and worst) practices. By the end of the article, you’ll be in a much better position to proceed if you determine you have to fire somebody.
Why Firing Someone Can Be Necessary
Many employers worry about letting employees go, and rightfully so. Terminating a contract puts the employee’s livelihood at risk, is interpersonally awkward, and can lead to legal backlash.
However, the reality is that firing people can sometimes be the only solution. Companies that hang onto poorly performing employees risk losing morale among staff who pull their weight.
Worse still, failing to carry out a poor performance termination early on can cause contagion. If one staff member can’t do their job properly, either out of lack of skill or motivation, disengagement might soon spread throughout the company.
Here’s the good news, though: Some employees who get fired report that the worst part of the process isn’t the firing itself, but the way it is done. This means that, if you get it right, you can minimize the pain. Of course, before firing someone, take every step to help them improve their performance, and have patience for the measures to take root. If that still doesn’t pan out, don’t drop the message like a bomb; instead, give them clear and timely notice, so they can prepare for their departure accordingly.
How To Fire Someone Who Is Not A Good Fit
In this section, we look at how to fire someone nicely. Here’s what to do:
Check That You’re On Solid Ground
To legally fire someone, you need clearly defined grounds. Otherwise, the affected employee can rightfully accuse you of wrongful termination.
For this reason, run your rationale for ending their contract past a jury of trusted colleagues. Make sure that the case against the employee rests solely on their poor performance (or financial failings at the company) and can’t be construed as a personal grudge or discrimination. Get your jury to highlight anything the worker could use against you, and make sure you are basing your decision on purely professional reasons.
Tell Your HR Team About Your Plans
Before making anything official, approach your HR department to talk about your plans. Get them to check the employee handbook and confirm that your grounds for termination fall within established company policy.
From here, your HR team can start making preparations. For instance, they may warn the IT department that they will soon need to block the employee’s network access. They should also calculate any severance pay or final compensation owed to the employee and supply you with the documentation you might need to make the dismissal official.
If you have a legal team, approach them at this stage and ask for their advice. They may alert you to potential stumbling blocks in firing certain employees.
Create A Transition Plan
Before you alert the employee in question that their time at your firm is up, create a viable transition plan. Do your research on the type of person who would best fill their role when they are gone. Try finding a suitable internal candidate within the company. If that fails, drop hints to clients and customers that you’re expecting a role change in the future.
Also, be savvy about the time and day of the week you choose to let someone go. Don’t wait until Friday afternoon and ruin your soon-to-be former employee’s weekend, on top of terminating their contract. Instead, firing them on Monday early in the day gives the person the rest of the week off to rest, recuperate, and regroup.
Arrange To Meet With The Employee
Employees usually already know termination is on the cards, particularly if they broke company policy or have already had a series of conduct warnings. While you shouldn’t explicitly state the purpose of the meeting in a message, make sure they know what to expect, so you don’t leave them stewing.
To fire someone with dignity, take them to a private place in your office and do it face-to-face. Don’t terminate them in front of other employees – only a trusted witness from your HR department, if necessary. Never fire people over the phone, or through text.
Start With The Bad News
During the termination meeting, always start with the bad news. Tell the employee that you’ve decided that it is best to let them go. Include the complete context for the termination in your statement, so the employee can have a clear picture of what has happened to them.
Here is a script to fire someone for poor performance that you can use during the meeting:
“Hello, Joe. Unfortunately, I have some bad news for you. Based on your performance, we have decided to terminate your contract, effective immediately. This means that you are no longer an employee of this company.”
Notice how the opening line of this statement warns the employee about what’s coming next: It is then followed by the bad news that the employee has lost their job. There is no ambiguity: The company rep is ending employment immediately.
When firing someone, avoid saying things like “I know how you feel,” or “This might hurt right now, but in the future, you’ll look back and say it was the best thing that ever happened to you.” You can (and should) express your regrets about the situation, but saying that you know how it feels while causing those feelings will seem tone-deaf at best. You also don’t know what consequences your decision will have on their life.
Also, don’t say things like “I might be willing to change my mind if you improve,” unless you mean that. Otherwise, these statements indicate that there are grounds for negotiation when there aren’t. Unless that’s a genuine option, don’t allow an employee to take a pay reduction for continued employment at the firm, either.
Also, never discuss personality traits or characteristics of the employee when firing them. Outside of hostile or discriminatory conduct towards other employees, these things can hardly be part of the reason for the firing.
Bring Up Performance Issues
Once you terminate the employee, you’ll then want to allude to the reasons, highlighting the many warnings you provided along the way - and make sure the warnings were really there.
Show them evidence of their poor performance and follow-ups that you made at each step. If necessary, bring copies of various worker monitoring metrics, emails, and feedback reports from clients.
Since you should have provided the employee with coaching sessions, bring evidence of these to the termination meeting. If HR put the person on a 30, 60, or 90-day performance plan, use this to demonstrate that, as a company, you did everything you could to prevent the person from being fired.
Cover The Essentials
Once you’ve delivered your message, you’ll then want to simply go through the essentials about what happens next. Discuss things like:
Unused vacation time
Pay for the month worked so far
Changes to computer access
Explanations to coworkers
Fulfillment of ongoing projects
At this juncture, the goal is to give the employee a roadmap for out of employment. Mention all practical details that concern them and let them know that you will be taking care of those.
Finalize The Meeting
Termination meetings themselves shouldn’t last long - half an hour is the maximum.
To fire an employee in the correct way, state all the necessary information according to your company handbook, and thoroughly explain the reasons behind your decision. Once you deliver the information, and allow the employee time to react, wrap up the meeting quickly, focusing on the worker’s dignity at all times.
The legal implications of firing someone badly can be quite severe, so always be professional. After delivering the bad news, allow employees to connect with their friends and family for emotional support.
Ideally, you’ll schedule an exit interview for the employee you’ve fired after a short while (e.g., a few weeks or a month after their termination). This will give them a chance to work through their experience and give you the feedback necessary to prevent similar situations in the future.
Also, at the time of firing, you’ll want to give the employee a letter containing all the critical details of their termination before they leave the office. This outlines the legal reasons for the employee being let go.
Termination letters should include:
A statement that the employee is being fired
Reasons for the termination
Practical instructions for returning any company-owned property
Information about any remaining wages, benefits, or insurance you will pay
Information about pensions
A concluding remark indicating that you are sorry to see them go
Here is a termination letter example:
“Dear [Full Name],
This letter is to inform you that your employment with the company is terminated, effective immediately [date].
You are being fired for failing to meet company performance standards (or repeated misconduct).
Please return your badges, keys, and equipment to the reception desk by [date].
You will be paid for the hours worked this month and will receive your final pay packet on [date]. Your health insurance will also be terminated from [date].
I am sorry about this decision to terminate your employment.
Provide Continued Healthcare Paperwork
Point out that your employee may be able to continue on their healthcare plan for a short time after they leave, thanks to the Consolidated Omnibus Budget Reconciliation Act of 1986. Your HR department should be able to provide them with any necessary paperwork.
Thank Them For Their Services
The last step is to simply thank the person for their services. Offer your best wishes for their future.
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Unfortunately, even the best way to fire someone will likely cause pain to the employee being fired. However, by following the right protocols, you can reduce risks dramatically and make the process easier for everyone.
Learning how to fire someone isn’t technically challenging, but it can be emotionally difficult, which is only natural. Always keep in mind that behind poor performance scores sits a person, and make sure the already difficult situation doesn’t further impinge on their dignity.
By Julija A. ·