Many times a month, and it was usually on pay days, I would wonder why I went into business for myself. As I signed everyone’s paychecks but my own and my employees left for their weekend, I wondered if it was really worth it. Now I was never a very good employee myself as my independence and inability to do something “just because I told you too” was not the ideal employee personality trait.
Not only was my personality a challenge but I chose to work in the accounting field (Big 8 audit firm so that will date me) right out of college and, just in case you didn’t know, accountants are not the cutting edge of risk and live on the edge type people. So let’s just say that my length of service was rather limited before I decided to go out on my own.
I had an eye opening experience regarding employees and the value they provide when I was starting my company in the early years. I was ambitious and a driver in my early 20’s ready to take on the world. My goal was to have 100 employees by the time I was 30 because to me that would be the definition of success. Now I already qualified myself as 20 so you have to give me some room here on my logic at the time.
Well I worked hard and was at 50 employees when I met with a friend of the family. He managed a company with well over 200 employees and explained my goal. He told me that his definition of success is to make as much money as he can with the least number of employees. Here he was with hundreds of employees and he is trying to go the other way. Huh, maybe he is onto something.
He went on to say that he spends more time dealing with employees than everything else combined. He suggested that I look at outsourcing and managing contracts over managing employees. He was right; I too spent an enormous amount of time hiring, firing, managing and evaluating employees. I also continually tried to keep them busy so they would stay even thought the work load changed and it cost me money.
It’s not that employees are bad; just known when you NEED them. As it relates to your employment and selling your business you should consider firing yourself before you go on the market. What this means is that you should be working ON your business not IN your business to maximize the value. Many family run, private companies have the owners involved too much in the day to day operations and working 50-60 hours a week. How do you think a buyer will feel if you have to work that many hours and you know the business? The buyers get cold feet and nervous when owners are that involved in the business operations.
From my experience the owners ideal involvement is 15-20 hours/week where they understand everything that is going on but their time is strategic in nature and less in operational.
Remember a buyer is looking for an opportunity to work and grow the company. Taking over an existing company is not easy and will take a substantial amount of time. If you, as the existing owner, are already working 50+ hours then how many will the new buyer have to work just to stay afloat?
The bottom line is that employees are both good and bad. They can make you money and lose you more. They are take time, emotional and financial effort and have brought me my highest highs and lowest lows. Just remember that when it comes to selling your business, success is based upon profit and not the number of employees. Actually the opposite is true, the fewer employees required to generate the sales revenue then the higher business value. Efficient and tightly run companies are worth more since there are less moving pieces and fewer chances to jump the track.
You are not the best employee, you are the owner, so remember to try to work yourself out of job and your company’s value will soar.