How you prepare your most important employees to take over your company | Entrepreneur

It is known that only 20% of small companies that are going to sell to the market, and the Silver Tsunami, who make the huge wave of Baby Boomer business owners who want to retire, make the problem worse. Most of these companies will not sell and they will be closed.

Who is injured when the company is closed?

• The business owner has no access to most of his assets.

• The employees have no job.

• The community loses a big asset.

Does the company have to be closed? Consider this: the company has customers, income, trained personnel, systems, distribution channels and an infrastructure and ecosystem that it took years to develop. It’s a shame to throw all that away!

The Traditional external buyers are strategic buyers, financial buyers and lifestyle buyers. If there are not enough buyers on the outside, what about looking at the inside?

Related: Why an increasing number of retreating entrepreneurs sell the company to their employees

Advantages of employee ownership

Business owner:

In addition to gaining access to most of their assets, entrepreneurs get control of the sales process. They don’t have to meet and greet different potential buyers.

When dealing with external buyers, they read and analyze intent from those interested, they choose and then struggle with an intense due diligence process led by the financial advisers of the potential buyer. The entire sales process is much easier when selling to important employees.

Important employees:

Important employees experience an important upgrade in their career.

Other employees:

Other employees retain their jobs and their “second family” remains intact.

Community:

The money that flows through the company remains in the community. That money helps education, fire brigade and police departments, road maintenance, etc. support support, also, suppliers, service employees and trusted advisers retain a customer.

Extra advantages:

The chemistry between copper and seller has been established. Often a deal goes to the south between the seller and a stranger due to a lack of chemistry.

The culture of the company remains the same. If a foreign national buys the company, the culture will change in one way or another. If these cultural changes are too intense, many important employees can leave.

Related: how to switch to employee ownership

Training your most important employees

The most important employees know the company inside and out. They know the customers, the product and the systems, and the other employees like them and respect them.

However, there are functions that performs a good CEO, and the most important employees are usually not involved, so they would need training. What are these functions?

Strategic planning:

This includes training in innovative growth strategies, plans in response to competition and navigating changes in the market and industry.

Cash flow:

It is necessary that the owner understands and implement cash flow management and prediction.

HR -Management:

The owner must have the feeling to evaluate the talent that is needed to perform specific tasks in the company. They must also know when an employee has a negative influence on the company and what he has to do about it.

Mindset Training:

The most important employees must adjust their mentality of that of an employee to that of an owner. When they talk to the trusted advisers of the company, they must have their owner like that.

Types of employee ownership

• Employee share ownership plan (ESOP): This is by far the most popular form of employee ownership.

• Employee ownership Trusts (Eots): Eots are intended to support employees and are increasingly common.

• Employee cooperative: A company that is owned and is checked by its employees.

All three of this type of employee can work well with larger companies. They are complicated and very expensive. They cost tens of thousands of dollars to set up every month and thousands to manage.

There are companies that specialize in setting up and managing the different types of employee ownership. Most require an EBITDA of $ 1 million or more before they even consider a company as a customer.

But what about the smaller companies that employees want to consider in their follow -up plan?

Selling the company to the most important employees would not be a program sponsored by the government. The deal would only include the business owner and the most important employee (s). The owner would choose the most important employees and their positions within the company in the future.

Related: selling your company to your employees

Select and move forward most important employees

The business owner must be very selective and careful when choosing their employees to own the company. They must have good creditworthiness and be well motivated to learn what is needed to be a business owner.

As a business owner, every important employee should approach that selected as a potential owner and, casually, states the possibility. After you have spoken with each important employee separately, you analyze their reactions in preparation to meet them collectively. If they are interested, follow the process.

The first thing you need to know is what your company is worth at the moment. You must have a market rating carried out. This will tell you how your company relates to similar companies in the same industry.

Then develop a plan to make the company effective, efficient and ready to scale. Choose an important employee to be president while you stay the CEO and the president trains in all the positions mentioned above. The other important employees are assigned management positions.

When the company has grown and the cash flow is sufficient to support increased debts, you make a plan to sell the company to the most important employees.