Although small businesses create thousands of jobs per year, they’re also responsible for just as many job losses. One reason for those job losses is an owner deciding to sell. For instance, they may let their employees go because they’re closing the company once it’s sold. Or maybe the new owners want to start from scratch and build a new team with new ownership.
Suppose you’re one of the small business owners out there considering selling your company. In that case, you must do all you can to not only prevent job loss in the process but also prioritize your employees in a way that ensures they’ll be well taken care of once you’ve made your exit.
Here’s how to prioritize your employees and keep your operation running smoothly when selling your business.
1. Develop a Detailed Selling Plan
First, you want your sale to be as organized and as smooth as possible. You can set up a seamless deal by mapping out the process in detail. Whichever template you use to organize the details of your sale, answers to the following questions should be a part of it:
- Why are you selling your business?
- What are your selling goals?
- Are you using a broker or selling it yourself?
- If you’re selling it yourself, how are you going to manage the process in its entirety?
- If you’re using a broker, who are they, and what is their contact information?
- Who else will be involved in the selling process?
- Who are your employees, and how will each be affected?
- How do you plan to protect your employees?
- What’s the target selling price?
- How do you plan to notify customers of the sale?
- What’s your exit strategy?
- What’s your business’s financial plan?
- What’s the plan for growing the company when you leave?
As you wait for quality leads on buyers, be sure to maximize the value of your business in the meantime.
2. Set Your Business Up for High Valuation
Setting your business up for a high valuation helps your chances of coming out of the sale with everything you want. It also gives you more leverage to negotiate in favor of your employees. In other words, you can have a lot more say in the deal, mainly how your employees are treated, when you know you’re giving a buyer a high-value business.
Do the following to make your business that much more attractive to potential buyers:
- Pay off as much debt as possible before the sale
- Focus on increasing cash flow in your business
- Ensure all of your financial and business information is accurate and organized
- Keep vendor and supplier relationships intact
Once you’re absolutely sure you’re selling your business and begin to get interest from potential buyers, it’s time to let your employees know.
3. Let Your Employees Know About Your Plans to Sell
You don’t want to let your employees know the moment you think about selling your business. Nor do you want to surprise them with the information. Still, you want to let your employees know about your plans to sell.
When exactly you let your employees know is up to you. But it’s best practice to give your employees a notice well enough in advance that they can look for other options if you’re closing your doors for good after the sale, probably between two to three months. They’ll appreciate the heads up and the time to do something about it.
Also, it may be best to let employees know in stages, starting with your managers and then working through to your lower-level employees.
Share with the new owners what’s worked for you when properly and positively motivating employees, like working with them on projects, keeping them supplied with varying tasks, or promoting deserving employees. You want to make sure you’re setting up the new owners and the existing employees throughout the full transition.
When you’ve given your employees a heads up, have individual conversations with each one.
4. Have Individual Conversations With Your Employees
If you have hopes of most, if not all, of your employees staying on after the sale, it’s best to have a private conversation with each of them to discuss plans.
If you want senior leaders to stay engaged throughout the selling process, maybe you talk about offering them a bonus to do so. If your lower-level employees have concerns about their job security, be sure to have an open discussion with them about that. In addition, you must have meetings with any stakeholders to ensure they’re on board with the sale.
As you move forward in the selling process, be as transparent as you can be.
Video: Terry Lammers and David C Barnett Talking to Employees About the Sale of a Business | David Barnett
5. Be as Transparent as You Can be Throughout the Process
You’ll have to keep the terms and specifics of the sale confidential. Still, that doesn’t eliminate the need for transparency throughout the process. Whatever you can tell your employees, offer that information to them without them having to ask.
At the same time, if they’re asking questions that you just cannot answer right now, offer your sincerest apologies and reassure them that when that information is available, you’ll get it to them.
All in all, most of the information regarding the sale should be shared on a need-to-know basis until the contract is finalized and you’re ready to share the next steps with your team. Also, it’s important to remember that you still have a business to run even while you’re waiting to sell it.
6. Continue to Run Your Business With Enthusiasm
You still have a company to run as you wait to execute the sale of your business. So, do it with the same enthusiasm, high-quality leadership, and productivity standards you would if you weren’t selling your business.
Continue to keep your customers satisfied. Maintain inventory. Keep your marketing efforts afloat. And manage your behind-the-scenes tasks effectively.
Also, pay special attention to your internal teams. Unfortunately, some of your employees will take the sale announcement hard. They’ll lose motivation, become angry, and overwhelmed with stress and anxiety about the unknown. So, you must acknowledge these things in your employees and help them navigate them by:
- Leaning into team-building activities
- Keeping your employees focused on the parts of their job they love
- Talking with them about where they want their career to go
- Helping them put together a development plan
- Working hard to negotiate the continued employment and care of your employees in the sale agreement
Let’s explore the last point a bit more.
7. Work With the New Owners For a Seamless Transition
If you’re serious about prioritizing your employees when selling your business, they must be a part of your negotiation talks. Fight for their continued employment and satisfactory job responsibilities. Include any benefits, resources, bonuses, and raises you want for your employees in the sale agreement.
Be sure your employee's well-being is considered in the new owner's continuity plan. The new owner should be aware of key business areas and risk and impact assessments that currently exist. You can work with the new owners to give them insights into keeping your employees motivated, productive, and engaged throughout and beyond the transition.
You can also work with the new owners to prevent the decrease in motivation we talked about above by sharing your current management techniques and style with them. This way, employees won’t be turned off by a new management style right off the bat and settle into the change on a comfortable timeline.
Selling your business is cause for celebration, but it may not feel that way for your employees. They’re losing an outstanding leader and are likely feeling uneasy about the transition.
Fortunately, you can soothe their fears by making them a priority when selling your company. Use the tips above to ensure your employees are adequately protected and cared for through the selling process and beyond.