A small business owner who wants to create resale value for his business should start early to find, train and maintain good employees.
- Find, Train and Keep Good Employees. Finding, training and keeping good employees is really a corollary to replacing yourself – you cannot replace yourself without valuable and trusted employees. Not only will these employees create value by helping you grow your business, but also they become a key asset in the sale that gives the sold business additional, and strong, value.
Because the key to all small business is personal relationships, you must have employees that foster those key relationships with your customers, suppliers, and each other. Nothing concerns me more for the long-term success of a small business than when I walk in and see unmotivated employees doing a terrible job. But how does one find good employees? HR Professionals write entire books and teach seminars on this issue, but the basics are to look for people who are competent, resourceful and engaged, and not necessarily in that order. Competence is, of course, a must. But job task skills can be taught, and often I find I want to be the one to teach my employees how I want a task done. That being said, each job has basic skills the employee must come to the table with. More important is resourcefulness. It can be difficult to determine this in an interview, but you sure can determine it in the first six months of employment. Resourceful people solve problems, and when they run out of work, they find something to do that helps the organization – they don’t go into “shut-down mode”. You want a team full of resourceful employees, and it is hard, but not impossible, to teach this (easier with young people). Finally, you need employees that are engaged, and by that I mean that they understand what service the company provides its customers and they are fully engaged in the mission of providing that service – even if it means doing a little more, staying a little late, or doing something that not, strictly speaking “their job”. It is more difficult to teach engagement than it is to teach skills or even resourcefulness, and the way you lead and treat your workers can have a dramatic effect on their engagement. High engagement levels are not, however, an excuse to overwork or take advantage of your workers, or they will quickly disengage.
Once you find these capable, resourceful, engaged workers, you have to keep them, and to do that you have to create a work environment where everyone is treated with dignity and respect, so people like to work there. You also have to pay them what they are worth, and enough to live on, so that they are not resentful or distracted. Providing benefits can be a great help in this area, often providing more goodwill and peace of mind for your employee per dollar than a raise, and setting your company apart from your competitors in the competition for valued labor. Finally, when possible, give your employees incentives to make the business more profitable. For key senior employees, you should consider giving them a contract that removes them from the worry of employment at-will and in return commits them to the Company.
When you are ready to sell your business, these valuable employees are a great asset. Having them will help to convince the potential buyer that you are replaceable, and therefore there is a business apart from you to buy. The buyer will likely want to come into the business and see the employees at work. If he sees these kinds of workers, the questions will be focused on how to retain them, and once negotiations begin to focus on retaining assets, you have built value and your bargaining position is strong. Finally, if you have done a really excellent job of building business value by being profitable, showing revenue growth across time, building intellectual property, and other ways we will discuss, you create the possibility that one or more of your key employees could obtain the financing to become your buyer, and that can be a great result.
Next Time: Customers as an Asset