Hire slow and fire fast. Sagacious advice which can apply to entrepreneurs with enough room for one employee or one hundred. Most entrepreneurs live and breathe their businesses. Sometimes, this can get in the way of hiring the right people as often, clouded in their judgment, entrepreneurs expect employees to share their passion outright. Commercial industries and the businesses contained within them vary; people exponentially more so. Some employees will be the right fit for the company, becoming a valuable part of the team and helping to achieve more while others…simply won’t.
There’s a debate between many entrepreneurs and employees about whether individual employees bring unique value to an organization or rather instead, everyone is replaceable. Without taking sides, it isn’t a stretch to suggest that while perhaps every employee may potentially be replaceable, the replacement might not live up to the expectations set forth. Hire the right employee and gain a dedicated team member motivated to help the company grow and flourish. Hire otherwise and risk becoming burdened with a ‘paycheck employee’; a black hole for productivity and morale, performing the minimal labor necessary to collect their earnings.
Hire an A-Team and Build More than a Business
Entrepreneurs dedicating the time and resources to finding people aligned with the mission, values, and approach of the organization can unlock several potential rewards.
Employees engaged in the success of the company are much more likely to perform better than their counterparts. Passionate employees will continually push to achieve more and are more likely to work as a team with other staff.
People employed where they want to be are less-likely to leave their position on a quest for greener pastures. For someone, this is their dream job. Placing the right person in the role can increase the chances they will remain there. An added benefit for the company, this can help by saving the time and resources necessary for training a replacement.
With the right people in the right roles, entrepreneurs may begin to reclaim their autonomy. The organization will begin to generate its own momentum, and the dedicated team will carry the company further than before. This can allow business owners to look at the future of the company and plan for a successful transition.
A successful, cohesive and functioning team brings with it untold value for the workplace. Beyond the present, placing the right people in the right roles is setting your own self up for a successful exit.
Employee Today, Buyer Tomorrow
Today’s modern serial entrepreneurs (those rapidly slapping businesses together, then selling them and starting over) are perpetuating a myth. This has many believing the only practice necessary for entrepreneurial success is to create a business; a buyer will surely step in and purchase, for a profit as well. According to the Small Business Administration, the 5 year survival rate of new businesses is a coin toss, about half of them don’t make it1. Of the profitable enterprises; preparing for a sale, identifying a buyer and getting to the closing table could be a long and frustrating process. Hiring the right people today can potentially help carve a pathway for a powerful transition later.
A growing number of Gen-X’ers and Baby Boomers are looking to successfully transition from business ownership. This may be to enjoy retirement, start a new venture, move to a board position or a number of other reasons. After spending years building a successful enterprise, many entrepreneurs are understandably anxious about handing over control. Atop that, many lack a tangible succession plan in the first place, paralyzing them in place. With the right team on board, handing over control can be easy.
Employee Stock Ownership Plan (ESOP)
It’s possible a single employee or group of employees can raise enough capital to buy the business. In many cases though, this is an unrealistic expectation. Entrepreneurs that want to take control of their company’s future, and play an active role in securing their own successful transition may wish to consider a special stock option for facilitating an employee purchase, an Employee Stock Ownership Plan (ESOP).
With an ESOP, qualifying employees gain a stake in the company through shares. To gain control of the company, employees would need only to acquire the owner’s shares. To purchase owner shares, employees can utilize a commercial loan, pay with private funds or, as is the case with many ESOP transactions, the owner can choose to finance the sale, gaining even more through interest.
Selling to a hand-picked team of employees interested in seeing the company succeed is one of the best methods for ensuring the continuation of the business you’ve worked so hard to create. Beyond that, it creates an opportunity to create a buyer where there may not have been one otherwise. Take control of your legacy. Play an active role in creating your own pathway to a powerful transition and hire an A-Team that believes in the business. For more on ESOPs, entrepreneurship, and other intelligent financial insights visit ProsperiFi.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.