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? |
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