Are you having trouble finding good employees for your business?
If not, congratulations, but you’re certainly NOT like most business owners since the Covid scare and subsequent government handouts began.
One of my favorite businesses, The Catfish Hole, has two locations and they recently closed one in Alma, Arkansas. My wife and I stopped by recently, and the sign on the locked door read, “Closed due to staffing issues.”
The hospitality industry has really been hit hard, particularly in the kitchens of some restaurants, and it’s reflected in less-than- hot food that just isn’t up to pre-covid standards.
So, if you’ve been thinking about selling your business, and if you have good employees who have helped to build the business, you’d best be planning to help the buyer retain those employees post-sale, because replacing them can be almost impossible.
And the loss of key employees to a buyer will drive the value of your business down.
Here are a couple of strategies the CBI Team has helped business sellers implement to protect their biggest investment, their businesses.
- If you’ve got time to plan for the sale (and you really, really should start planning 2-5 years before the planned exit), then one of the best tools is to ask key employees to sign a non-compete agreement. There are several risks to implementing non-competes, particularly if you’ve never required them in your business. Employees can push back on this and some may even demand some type of compensation in exchange for the non-compete. And be very careful in crafting the legal document to be used. The courts have become increasingly less favorable towards non-competes so have your attorney draft one that will pass the legal tests.
- If you’re ready to sell and didn’t plan the sale 2-5 years in advance, then the best tool to retain key employees is using a “retention bonus” to encourage and incentivize the employees to stay on long enough to make a smooth transition for the buyer. Often you as a seller and the buyer can share this bonus because it’s helpful for both parties.
There are many issues to consider before you sell your business, so it’s wise to start early and let a trained, professional CBI Team business broker help you. There is no charge for the initial evaluation, and it can mean you can retain something when you sell, your future stream of income.
And that’s all I have to say about that……..