Working on your business, not in it. I’m sure you’ve heard this sentiment, especially if you want to increase business value. It makes sense, right? However, growth doesn’t happen by itself, and if it does, it won’t be sustainable if you’re not actively engaged in strategic planning.
But maximising value isn’t just about business development. Working on your business shifts you from short-term thinking into long-term thinking. You disengage from the fires you put out every day and zoom out to see the bigger picture. You reconnect with business goals and reflect on the barriers that are stopping you from achieving them.
As a business owner myself, I know it’s easy to talk about the importance of working on your business and not so easy to put it into practice. Unfortunately, time isn’t on your side. Day-to-day operations are relentless, and it’s not uncommon to lose a whole year without actioning any ambitious plans you have had swirling around in your mind.
I can tell you; every business owner empathises with this problem. And some will think it’s theirs to solve alone. But did you know you can inspire your staff to work towards top-level business goals? If you instil an ownership mindset into your team, they will help maximise the value of your business alongside you.
The importance of an ownership mindset to value acceleration
First, let’s define an ownership mindset. An ownership mindset is when your employees think and act like business owners. They have agency. They not only feel valued but they are actively contributing to the direction of the business and want it to succeed.
Why do you want your employees to have an ownership mindset? As I mentioned in Ownership Mindset: The business model explained, if you successfully instil an ownership mindset into your team, it creates a “culture of accountability, purpose and profit.” Like a school of fish swimming in the same direction, you and your employees align with the company’s vision and move in synchronicity to make the business better.
But how do you instil an ownership mindset? That’s the big question. Achieving employee ownership takes more than a few inspiring meetings and corporate platitudes. It takes a tangible incentive to get buy-in. Enter Employee Share Schemes – one of the most effective ways to create an ownership mindset and maximise value.
Benefits of Employee Share Schemes (ESS) or Employee Share Ownership Plans (ESOP)
Employee share schemes (ESS) give employees shares in your company at a discounted rate, the ability to salary sacrifice to buy shares, earn shares as part of a bonus or incentive plan or the opportunity to buy shares in the future. They also get tax concessions on the shares.
How does ESS increase the value of your business? Employee Share Schemes cultivate the ownership mindset I mentioned earlier. Instead of a top-down management approach that attempts to motivate staff to achieve strategic goals, employees are invested (literally) in your company, so they want it to succeed.
Think about the last time you were an employee. Imagine how much more motivated you would have been if you had a real ownership stake in the company? And now think about the strategic plans you have put in place in the past which have failed due to a lack of employee contribution? If people were invested, it could have looked a lot different.
Employee Share Schemes (ESS) or Employee Share Ownership Plans (ESOP) have the following benefits:
- Cultivates an ownership mindset
- Improves staff performance
- Creates a motivated and inspired workplace culture
- Attracts and retain valuable staff
- Improves staff retention
- Saves on tax through deductions
- Generates higher profits
- Builds employee wealth
- Improves the long-term value of your company
I have found that Employee Share Ownership Plans (ESOP) attract, retain, motivate, and reward key employees and have been a massive part of creating long-term success.
How to set up an Employee Share Ownership Plans (ESOP)
You may be thinking, okay, let’s do this. Let’s get my employees into an ESOP. Just keep in mind that it’s essential to create an Employee Share Ownership Plan that is:
- Attractive to employees
- Transparent
- Easy to implement
- A win, win, win scenario where all stakeholders are better off
Want to learn more about Employee Share Ownership Plans and how they increase business value? Talk to our advisors.
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