The Training Investment Gap: 60% on Salaries, 1% on Training

Key Takeaway

Most small businesses spend 60-70% of their overhead on salaries and just 1% on training those same people. That is the training investment gap. The conventional wisdom, "We'll invest in training when we're bigger," has it backwards. Training is how you get big. Companies that systematize their knowledge early don't just retain better; they scale faster, make fewer expensive mistakes, and stop losing institutional wisdom every time someone leaves.

The Lie Small Businesses Have Been Told

There's a story that gets passed around in small business circles like gospel. It goes like this: You need a trainer when you're big. You need a real training program when you have enough bodies to justify it. Right now, you just need to hire smart people and let them figure it out.

It's one of the most expensive lies in business.

Jon LoDuca, founder of Playbook Builder and someone who's spent 25 years extracting wisdom from top operators, puts it bluntly: "Nobody mentions that investing in your people is how you get big. You operationalize for scale. You pour into people so you actually get the value out of everyone's contribution."

The numbers back him up. Most small and mid-sized businesses dedicate 60-70% of their overhead to salaries. That's the biggest line item on the P&L by a mile. And the training investment, the amount spent making those expensive humans better at their jobs? About 1%.

Think about that ratio for a second. You're spending the vast majority of your money on people, and keeping your training investment at almost nothing. It's like buying a fleet of trucks and never changing the oil.

Why the Training Investment Gap Exists (And Why It's Getting Worse)

The training investment gap isn't laziness. It's a structural problem rooted in outdated thinking.

Most of the foundational thinkers about process and training (Adam Smith, Frederick Taylor, Henry Ford, even modern ones like Michael Gerber and Gino Wickman) built their frameworks in a world that moved slower. Gino Wickman didn't have a smartphone when he wrote Traction. He couldn't have imagined what small businesses deal with today: the pace of change, the way people consume information, the constant churn of employees who expect more than a binder on their first day.

The tools haven't caught up either. Most training software in the small business space is built on a 20th-century model: log in, sit through a two-hour course, watch a narrated PowerPoint, take a quiz. It's what Jon calls "a 20th-century artifact," and it's the reason most companies try training once, watch it fail, and conclude that training doesn't work for them.

Training works. The delivery model was broken.

The Real Cost of the Training Investment Gap

When you skip the training investment, you're not saving money, you're spending it differently. You're paying for it in longer ramp-up times for new hires, repeated mistakes that experienced employees would never make, customer complaints from inconsistent service, and the massive knowledge loss when your best people leave. In our own research across 16 small businesses, the average company had documented just 27% of its core processes, so most of what training exists to transfer was never captured in the first place. One company we worked with estimated that a single senior employee departure cost them six months of productivity, not because they couldn't hire a replacement, but because nobody had captured what that person knew.

The "We'll Do It When We're Bigger" Trap

Here's the paradox: the companies that wait until they're "big enough" for a real training investment never get as big as they could have.

At 10 employees, knowledge lives in people's heads. Everyone knows everyone, so you can get away with it. At 25, the cracks show. The founder can't personally train every new hire anymore. Tribal knowledge starts getting lost. At 50, it's a crisis: you're hemorrhaging institutional knowledge faster than you can transfer it, and every new hire takes twice as long to become productive because there's no system to bring them up to speed.

The companies that thrive at 50, 100, and beyond are the ones that started building training systems at 15. Not because they had the budget for a training department, but because they understood that capturing and transferring knowledge is a business function, not a luxury.

As Jon puts it: "If you've got a problem in an L10, it's likely a who or a how. Either somebody hasn't been trained, or they don't know what's expected. The only way to diagnose that is to have visibility into whether they've actually been equipped with the tools they need."

What Actually Works: The New Model for Small Business Training

The old model (write SOPs, put them in a shared drive, hope people read them) doesn't work. We see it constantly. Companies spend weeks documenting their processes, create beautiful SOPs, upload them to Google Drive or Notion or wherever, and then... nothing. Nobody reads them. Nobody references them. They become digital dust collectors.

The new model works on three principles that Jon and his team at Playbook Builder have refined over 25 years:

1. Video First, Documents Second

People don't read 14-page SOPs. They just don't. But they'll watch a two-minute video of someone showing them how to do something. Jon uses a metaphor we love: "Mom's apple pie recipe is a perfectly good outline, if you already know how to make a pie. If you've never seen one, you wouldn't make a pie out of that recipe. You'd just make some mess in a bowl."

The recipe is the SOP. What you actually need is time in the kitchen with grandma: shoulder to shoulder, watching her hands, hearing her stories about why she uses these apples and not those. Video captures that. A document never will.

The practical version: your subject matter experts record short videos (30 seconds to 3 minutes) showing how they do their work. AI transcribes the video and generates written work instructions automatically. You get both formats (the video for learning, the text for quick reference) from a single recording that takes less time than writing an SOP.

2. Push, Don't Post

This is the insight that separates platforms like Playbook Builder from a glorified Google Drive: you can't just put training in the cloud and expect people to find it. They won't.

Jon learned this the hard way. "We first built the software and neglected to include communication tools. We thought, well, everything is in the cloud, people will find it. What happened? Nobody found it. People had accounts they weren't using."

The fix: marketing software baked into the training platform. Text your team when new content drops. Schedule drip campaigns for onboarding. Send reminders on a cadence. Pull reports to see who's engaging and who isn't. Training without distribution is like marketing without ads. You built something great and told nobody about it.

3. Measure, Don't Hope

If you can't see who's gone through the training, you can't hold anyone accountable. And if there's no accountability, the training program dies within a month.

The best operators we work with treat their training metrics the same way they treat their scorecards. Scorecard numbers are off track? Pull the car over. Do we have a playbook for this? If yes, have people actually gone through it? If not, that's the gap. If they have gone through it and still aren't performing, that's a different conversation, but at least now you know which conversation to have.

The Playbook Builder Workflow

Jon's team has distilled this into a simple cycle: Scorecard reveals a gap → Check if a playbook exists → Create or update content → Push it to the right people → Pull reports to verify engagement → Watch the scorecard numbers respond. It turns the training investment from a one-time event into a continuous business function.

Start Before You're Ready

A real training investment doesn't start with headcount. You don't need a training department. You don't need a six-month rollout plan. You don't even need all your processes documented.

You need one playbook. The one tied to the biggest fire in your business right now. The process that's causing the most pain, costing the most money, or creating the most inconsistency.

Build it to 80%. Not 100%. 80%. Jon's rule is "a little less Hermione Granger, a little more Ron Weasley." You can be a C student at this and still win. Get it out there. Get people learning. Wait for feedback. Improve it. Then start on the next one.

Here's why 80% matters: your team is starving for this. They want to know how to do their jobs well. They want context, not just instructions. Every week you wait for "perfect" is a week they're figuring it out on their own, and getting it wrong in ways that cost you money.

Who Needs to Own This

Every successful training investment we've seen has three roles behind it:

The Builder is the key hire most companies miss. They don't need deep expertise in your operations. They need to be organized, persistent, and good at getting information out of other people. Jon's team sees the best results from people with strong follow-through, a sense for quality content, and the willingness to get their hands dirty in the software. Think "junior marketer who's not afraid to pester the VP of operations for a five-minute video."

The Compound Effect of Training Investment

Here's what happens when you close the training investment gap:

Month 1: Your first training investment is a playbook built around your biggest pain point. It's rough. It's 80%. But your team has something they didn't have before: a single source of truth for how things should be done.

Month 3: You've got three or four playbooks in production. New hires are onboarding faster. Your veteran employees are contributing their knowledge instead of hoarding it. You're starting to see the scorecard move.

Month 6: Training is a function, not a project. Your team expects it. They contribute to it. When someone leaves, their knowledge doesn't leave with them because it's been captured in video and documented in the system. When someone new joins, they're productive in weeks instead of months.

Month 12: Your training investment has become a knowledge asset. It appreciates over time. Every video recorded, every process documented, every piece of tribal knowledge captured, that's compounding value that makes your business more resilient, more scalable, and frankly, more valuable if you ever decide to sell.

That 1% training investment? Bump it to 3%. Dedicate a few hours a week. Assign a Builder. Use a platform designed for how people actually learn in 2026, not a 20th-century LMS.

Closing the training investment gap is one move inside a larger shift: turning an owner-run business into one that runs on systems. For the full sequence it fits into, see our step-by-step guide on how to systemize your business.

The training investment gap, the distance between what you spend on people and what you spend on making them great, is the gap between where you are and where you could be.