Can You Care for Your People and Protect Your Profits?
Nov 6, 2023
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Topics include transferring ownership in a high-risk business, competing with Corporate America in employee benefits, handling an employee with sick child, and fairly setting compensation for your team.
46:03
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Quick takeaways
Conduct a comprehensive compensation study to determine fair raises and strike a balance between compensation and productivity.
Include specific documentation in business sale agreements to protect against liabilities and require proof of liability insurance for the new owner.
Deep dives
Determining Raises
To determine when and how much to give raises to employees, it's important to do a comprehensive compensation study in your industry to gauge the market rate for each position. This will ensure that you are competitive and not overpaying or underpaying your employees. Additionally, consider the tenure and performance of your employees. Those who have been with the company for a longer time and consistently perform at a high level may warrant higher raises. However, it's crucial to strike a balance between providing fair compensation and ensuring that employees' productivity aligns with their compensation. Finally, if you have extra profits and want to reward your team, consider implementing profit-sharing plans or other forms of bonuses to share the success with your employees.
Mitigating liabilities in the sale of a business
In the context of selling a business, it's important to mitigate liabilities for both the exiting owner and the new owner. If your business involves high liability, such as bonded jobs, it's crucial to include documentation specifying the maintenance of bonds as a condition of the sale. This ensures that if the new owner fails to maintain the necessary bonds, you can take over the business to protect its value. Additionally, requiring proof of liability insurance for the new owner is essential, given the potential costly consequences of liability issues. Maintaining clear documentation, including clauses related to default in the event of non-compliance with bonding and insurance requirements, helps protect the interests of both parties involved in the transition.
Deciding when to offer employee benefits
Determining when to offer formal benefits such as 401(k) plans and medical insurance in a small business depends on the financial capacity and profitability of the company. In the early stages, it might be challenging to provide benefits due to limited margins. However, as the business grows and gains profitability, it becomes more feasible and ethical to provide benefits that align with the financial well-being of your employees. Consider whether you have the necessary resources to offer benefits and analyze the potential return on investment. By aligning benefits with what you genuinely believe in as a business owner, such as offering a strong 401(k) matching program, you can enhance employee satisfaction and morale while staying competitive as an employer.
Balancing empathy towards employees with business needs
Balancing empathy and accommodation for employees while effectively managing the needs of the business can be a delicate task. As an employer, it's important to treat your employees with the same care and understanding as you would want to be treated in a similar situation. Find ways to support employees who may be facing challenges like a sick child by extending accommodations and showing understanding. However, clear communication is essential to ensure that the arrangement is temporary and has boundaries to prevent taking advantage of the situation. Additionally, demonstrating loyalty and grace towards your team members can foster loyalty in return, leading to a positive work environment and productive relationships.
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