How to Ask for a Raise in a Small Company [8 Tips]

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You are a young professional working in a small company—busy, focused, and busting your butt to present the best version of yourself. However, you feel that your employer doesn’t appropriately compensate you. 

You are not alone. About 8 in 10 (77%) of American workers believe they’re underpaid, Business.org reported. 

So, you want a little more money. Don’t we all? But you know it’s different asking for a raise in a small company than in a large one. 

It goes beyond deciding when the time is right. You must know how to approach your boss the right way with sound reasoning behind your proposal.

But the question is: Have you been with the company for at least six months and consistently doing well to warrant a raise? 

If you think you fit the bill, read on. I’ll show you how to ask for a raise in a small company using proven negotiation strategies.

Asking for a Raise in a Small Company vs. a Large Company

Similarities

  • Prior research is necessary: Whether you work in a small company or large enterprise, please know the going rate for your position in your industry and your geographic area— unless you don’t mind getting shafted by your boss.
  • Timing is critical: Make sure your company is doing well and that you’re delivering beyond expectations. The best time to ask for a raise is after achieving something exceptional. 
  • You must back up your claims: Having numbers showing your success helps your boss understand you’re worth more money and build a compelling case if they need to go to their boss or HR. 
  • Politeness goes far: It’s polite to thank your boss for their time after the meeting. And when you receive the raise, don’t leave them feeling like they were taken advantage of or made a mistake. A simple ‘thank you” goes a long way.

Differences

There are several differences in asking for a raise in a small company versus a large company.

To begin with, smaller companies typically have less room in their budgets to give generous raises than giant corporations. So, they often emphasize benefits or perks like flexible schedules or fewer hours.

But on the other hand, in smaller businesses, the decision-makers are closer and easier to access. You’ll probably talk directly to the owner about your raise. 

You have little to no power if you’re at the bottom of the ladder in a large company, and your only connection to the top is your supervisor. In addition, many people get involved with raises within HR or whatever department handles compensation in large corporations.

While they guarantee substantial raises, large companies have more rigid pay structures. So you’ll need to work harder to make your case. Smaller businesses often have more flexibility regarding compensation. Still, again, they may not have the money available to grant big raises.

You’re Worth More Than You Think

The current job market is one of the best times to negotiate your salary. U.S. companies are hiring faster, and the unemployment rate declined to 3.6% in March, representing a remarkable recovery in the job market since the onset of the Covid-19.

Consider also that employers expect to spend more on their workforces in 2022. The average increase in base salaries is projected to surge to 3.9% in 2022 compared with 2.6% in April 2021, The Conference Board study showed. 

With the inflation rate accelerating to 8.5% in the past 12 months ending March 2022, companies are continually investing in new ways to retain their workforce and address the rising cost of living. That includes additional benefits such as additional time-off, work and schedule flexibility, financial literacy, and well-being benefits.

 So it’s time to ask for a raise. And the sooner, the better. Next, let’s focus on how to ask for a raise in a small company. 

8 Tips for Asking for a Raise in a Small Company

Asking for more money feels awkward, especially if your boss is the company’s owner and has direct financial ties to it. Luckily, there are ways to ensure your request gets heard and considered without making things awkward or uncomfortable.

Here’s how I recommend going about it:

  • Adopt a broader perspective
  • Analyze your value
  • Manage your expectations
  • Time it well
  • Prepare facts showing how valuable you’ve been
  • Broach the matter in person
  • Get comfortable with an awkward conversation
  • Get ready for a “No!”

1. Adopt a broader perspective

It helps to see the bigger picture when learning how to ask a small business owner for a pay raise. 

If you think you’re underpaid, why? Is it because you’re younger or less experienced than your coworkers? Either way, it’s important to compare yourself with others in similar positions at similar companies to make an educated decision about asking for a raise.

You can find the average salary in your industry and geographical region on sites like PayScale or Salary.com.

It makes sense to put yourself in the business owner’s shoes and present your request as much as possible from their point of view. They care more about the business’s overall financial health than whether an employee gets a raise.

Even if the management team wanted to give you a raise, they might not have the funds or organizational flexibility to do so. And it’s not a surprise that a staggering 83% of small business owners make less than $100K per year, while 30% have no salary. 

But just because raises are more limited in scope at small companies doesn’t mean that asking isn’t worthwhile! 

2. Analyze your value

Next on how to ask for a raise in a small company is knowing what makes you a valuable employee

How have you demonstrated you’re worth more than your current salary? Below are the primary questions to answer:

  • Have I been consistently meeting deadlines?
  • Have I been exceeding my boss’ expectations?
  • How has my job changed since I started? Have I taken on more responsibilities?
  • Do I have the capacity to handle more demanding roles? 

The answers should help you decide whether or not you deserve a raise and make a compelling case for that bump. 

3. Manage your expectations

Asking for a raise can feel uncomfortable, so many avoid it. But it’s not as hard as you might think. 

Much of the anxiety comes from how we view raises: You either get one or don’t. 

But, like many things in life, the reality is far more complex. Suppose you walk into your boss’s office expecting a strict binary answer. You’ll probably feel humiliated by anything other than “Yes.”

But if you enter the conversation with a few specific goals in mind — to learn about your worth to the company, to set clear expectations for what it would take to earn more money/promotions in the future, and to lay some groundwork for asking again later — then there’s no reason to panic over a “no.” 

Here’s what to do if you don’t get the raise you want.

4. Time it well

Asking for a raise at the wrong time can lead to rejection or even resentment. It’s a conversation you want to avoid if you’re a new hire. 

Employers only have so much money to spend on payroll. Plus, they want that money to go toward the most productive employees. So, if you haven’t delivered measurable results that demonstrate your value as an employee, now isn’t the time to ask for a raise.

But how do you know if your results are measurable? It depends on your job function, but in general, measurable results should be tied to goals set by your manager or company. 

Generally, you’re better off requesting a raise only when you’ve added value to the company by taking on more responsibilities, working harder, or coming up with innovative ideas. 

But again, raise the matter when the company is doing well financially, and your manager is in good spirits.

5. Prepare facts showing how valuable you’ve been

Why do you deserve more money? Sure, you already know your worth, but if your answer is “I think I deserve it” or “My peers are making much more,” that’s not going to cut it. 

Making your case based on quantifiable facts instead of emotion makes it easy for your boss to justify giving you a raise. Start with taking stock of your recent accomplishments that directly impacted the company’s bottom line.

What have you done in the last 6-12 months that has made money, saved money, or fixed a problem for the small company? Even if it’s something as minor as “I reinvented our resource allocation process, saving the company $6,000”, write it down. 

Next, determine how much of an increase makes sense for you and your employer. You don’t want to shoot too low and risk seeming underqualified or undervalued. Still, naming a number that’s too high could compromise negotiations. 

While 52% of companies expect to spend at least 5% more on bonuses and incentive payments, try your luck with requesting a 10% raise. 

6. Broach the topic in person

The back-and-forth nature of an in-person conversation means getting immediate feedback on your manager’s ideas and concerns. 

In-person conversations allow you to read facial expressions and body language. You can pick up clues on how your boss feels about what you’re saying. That way, you can act accordingly. After all, 93% of our communication is nonverbal. 

While it might be tempting to bring up a pay raise during a regular one-on-one meeting, this could put your boss on the defensive.

Instead, look at their calendar and ask if there’s an open time slot for a separate meeting. Frame the conversation as part of your professional development rather than just an attempt to get more money.

7. Get comfortable with an awkward conversation

Once you have all of the facts gathered, think through how you want to present your case. It’s best if the conversation feels natural—not contrived or overly rehearsed. 

Try not to get too nervous— remember that it’s normal (and healthy) to want a raise when your work merits it.

Practicing what to say beforehand helps instill confidence. In addition, you’ll be less likely to get flustered or stumble over your words during the actual conversation. I recommend practicing with a friend who can give feedback on your delivery and if your pitch sounds too scripted.

Be confident (not arrogant), and please leave personal issues (e.g., financial struggles) out of the conversation.

8. Get ready for a “No!”

Preparing for counterarguments minimizes a fair share of awkwardness when asking a small business owner for a raise.

A “No!” may suffice for several reasons. 

Your boss might claim you’re not as good at your job as you think. In that case, ask what areas you should improve on to warrant a raise in the future.

If the company can’t afford raises right now or your boss have other more pressing matters, request to check with them later and mark the date on your calendar.

But you could miss other benefits just as valuable as a pay increase when you focus solely on money. So, welcome training and development opportunities, schedule flexibility, remote working, and other non-salary options. 

What if a pay increase and other benefits are unlikely soon? Your best bet is to explore job opportunities outside the company. Yup, jumping ship could earn you 15% more money.

Summary

Learning how to ask for raise in a small company is necessary for any young professional committed to a fulfilling career. 

If you’ve spent enough time at a company and proven your worth, it’s not unreasonable to ask for fair compensation. Have your numbers straight and time the request. Be professional, logical, and persuasive without being pushy or inconsiderate. Your boss will appreciate your well-thought-out argument and possibly grant your request.

If a raise is unforeseeable, please consider all other options at your disposal before jumping ship. 

Best of luck with growing your career and financial freedom!

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