Bringing On Next Gen Shareholders
Is your business completely dependent on you as the business owner? What happens if you decide to step away or take a holiday? What happens when you want to retire or go and do something else?
Most business owners can’t step away from their businesses – even for a week! And most definitely haven’t thought about the end game and what happens when they want to exit the business.
So how can you maximise business growth and how can you put a plan in place, so when it’s time to exit – the business keeps going and you reap the benefits of all of your years of hard work.
One strategy is to bring on a next generation of shareholders into your business.
A key benefit of having additional shareholders in your business is that you have more people around you, incentivised and motivated to build the business alongside you. It’s a fantastic way to leverage more people around you – helping you grow the business faster.
Another benefit is - legacy. When it’s time for you to exit the business, you’re passing it down to the next generation. So the business won’t sink after you let go of the helm. Quite the contrary, it will continue to make an impact even after you’ve left.
Now, before you offer shares to anyone, it’s vital that you get your business valued. There is also some thinking around offering internal share ownership at a slight discount to an external market valuation as an incentive to buy into the business.
There are also a few different models that you can look at when offering shares to a next generation of shareholders - the standard buy-in, the discounted share model & an internal buyback scheme.
Finally, there is one extremely important part of any shareholders scheme which is: ‘Make it as easy as possible to buy and sell internal shares’. If it’s too hard or not attractive enough, the people that you have earmarked to buy in – just won’t. And that hurts you and them.
If you’d like to learn more, please take a look at my most recent podcast episode on this exact topic:
Click here for the podcast episode.
Click here to watch the video.
Josh ‘Next Gen Shareholder’ Stone
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