Over the years, I’ve seen hundreds of small businesses hit a glass ceiling — because owners are so involved in day-to-day operations, they can’t scale the business into something larger. They don’t trust their own people to be key players.
I recently spoke to a business owner who told me, “I’ve been stuck at $4 million in annual sales for five years now.” I asked how many employees he has and if he’s considered adding more. He said, “I’m trying to not hire any more people.”
With that mindset, he’ll never expand his business beyond the number of hours in his own day. For a business to grow, it needs to invest in key employees who can help take things to the next level.
“We hire smart people so they can tell us what to do.” – Steve Jobs
Apple changed the world with this idea: “It doesn’t make sense to hire smart people and then tell them what to do. We hire smart people so they can tell us what to do.”
The greatest value in your business lies in what key people bring to the table. Maybe it’s their leadership, customer relationships, or knack for developing new business. So just imagine the devastating impact on your business if any of your key people were to leave just before you exit the business!
How Key Employees Fit into Your Transition Plan
Often, we assume our key people will end up buying the business from us. But have you ever actually asked them: “Are you willing to take over the business – and assume the risk and the debt?”
One of our clients was convinced that his second-in-command employee would be heir-apparent to the business. I asked, “Have you spoken to him about this?” My comment inspired the owner to set up a dinner date with the employee and his wife, where he popped the question and was shocked to hear, “No. We’re actually moving out of town.” You could’ve heard a pin drop. Talk about needing a Plan B!
Faced with the reality of personally signing for a large bank debt and running day-to-day operations, your trusty employee may suddenly look like a deer in the headlights. That’s why we help clients prepare for those critical conversations.
It begins with whittling down to a list of two or three key employees you believe would be interested and able to take ownership. Then validate your assumptions.
At Succession Plus US we help small business owners assess key employees and prepare for “the ask” that can determine your exit timeline – and your transition success.
Ready or Not — Change Happens
I knew a small business owner with a light manufacturing business doing $7 million in annual sales. He was surrounded by a fiercely loyal workforce of eleven employees and expected to continue running the company for many years. But this past year, he died without warning from a heart attack at age 64.
Suddenly, his college-age daughter was responsible for saving his business in order to sell it. This could easily have been a disaster – but that devoted cadre of employees rallied around and taught her what she needed to know. Miraculously, his business didn’t implode. It was sold and continues to operate, thanks to those employees dedicated to the owner and his business.
Never underestimate the value of key employees in your business. They can grow your business, buy your business – or save it in ways you never imagined. Find them. Hire them. Then get creative about inspiring them to stay. In my next blog post, you’ll learn practical ways to reward and retain your key employees.
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