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Last Update: Saturday September 18, 2021

Employee-Stock Ownership Plans is a move to Steps 7 and 8.

Employees Participate on the Bottomline

SAN DIEGO: Ray Smilor is an expert on Employee Stock Ownership Plans. In this special episode, he is joined by entrepreneurs where we will learn the benefits of using an ESOP to grow your business and even to exit it.

To understand ownership, we have to understand something about the value of what is owned. It is a lot more than your current ratio (current assets divided by the current liabilities). Business valuation involves multiples, which are unique in every industry, and intangibles, that is your goodwill and so much more. There are several episodes of the show that focus on BUSINESS VALUATION.   More...

Once you start that process, you'll discover a range of value for the equity in the business. So, if you need some liquidity or you want to move to STEP 8 and make your business sustainable, you do have choices. If you find the people in this episode compelling and you have employees, you might begin thinking the equity contribution that each employee is making.

We meet Rick Valencia, founder of ProfitLine, recognized as one of the best places in San Diego in which to work. You might ask yourself, "How did he get employees to think about the profit line of his business?" The simple answer is, "He vested them." And he does it within 90 days of their start date! Sharing equity for Rick is a means to have them care about the business.

Once a person is actively participating in the bottom line or the profit line of the business, once they are vested, don't you think they'd act differently? Care more? Ray Smilor says that typical productivity increases 4-5% per year.

What would that do to your profit line? 

There are eight steps to start, run and grow a business. Every business owner eventually climbs all eight steps. There are four very unique steps to start a business.  And, there are four equally unique steps to grow a business. Each step to start and grow a business requires very particular gifts and talents.  And, every step requires personal growth to have the business grow.   If you are stuck on  Step 4, a sole proprietor,  you might think about the next phase of growth using an employee-stock ownership program to begin your transition strategy to Step 7 (sustainability) and Step 8 (Exiting).

Give Employees Ownership

2:02 | Play Now | Rick Valencia's Company, ProfitLine, uses an Employee Stock Ownership Plan.  Rick believes that employees want to own a piece of the company.

Learn From A Big Guy

1:26 | Play Now | Ray Smilor ran the Beyster Institute founded by Dr. J. Robert Beyster because he wanted to teach business owners how to establish an  ESOP (Employee Stock Ownership Plan).   Ray explains how Dr. Beyster used an ESOP to grow his company from zero to 41,000 employees.

Anticipate all Future Possibilities

4:25 | Play Now | Succession planning should not be left to the survivors. When founders of business die, the business often dies with them.  Not so at Hot Dog On A Stick.   Freddie Thode talks about the founder's decision to set up an Employee Stock Ownership Plan as a succession planning tool.

Use Ownership To Recruit

4:14 | Play Now | Employee Stock Ownership Plans are good for recruiting and retention of great people and they can also change the culture of an organization.   This is Ned Lester formerly of Maxim Systems.

Take Out Some Cash

3:05 | Play Now | This is a special episode about  Employee Stock Ownership Plans.  Host Hattie Bryant says that the ESOP is a way for an owner to take some cash out of the business.

Value Your Business

3:17 | Play Now | Meet Ray Smilor of Beyster Institute at the Rady School of Management, University of California San Diego.  He is an expert on Employee Stock Ownership Plans and the institute is a resource for anyone who wants to learn more.

Teach Ownership Thinking

3:59 | Play Now | Meeko Mullin works for Hot Dog On A Stick and she is an owner.  Her leadership responsibility  includes calculating the cost of labor on the shift she is running.

Be A Team Player

1:15 | Play Now | The owners we have studied here know that the buck stops on their desks but at the same time they are able to position themselves are a key player or coach rather than as the boss.