Think like a business owner because you are an employee owner.
Your ESOP shares are held for your future benefit and the benefit of your coworkers. As you are working at your employee owned company, the value of your company stock is determined each year by an independent appraisal of the valuation of the company. This affects the value of your shares and your personal wealth.
A key measure of company value is dependent on company performance or profits.
This is where being an Employee Owner can have an impact on the value of the company. In simple terms profit is equal to revenue minus expenses. As an employee owner you can contribute to growing profits or reducing expenses depending on your role in the organization.
profit = revenue - expenses
Look for ways to increase revenue.
The best and fastest way to increase your revenue is to focus on your customers.
As an employee owner, if you are customer facing, you can grow sales by doing more customer visits and explaining the benefits of your products and services. By educating your customers on the “perceived value” of your product, your customers will desire your products/services even more. Finding new ways to solve customer problems can grow sales as well. And, providing good customer service can help retain customers who may be looking for a better deal.
If you do not interact with customers directly, there are many steps you can take to improve company profitability and employee productivity.
1. Put value in employee education.
Maximize your employees' skills by assessing the current usage of your employee's experience and skills. Then, provide opportunities and incentive for professional development.
Employees utilizing their talents will be more effective and efficient, which will in turn increase productivity and save time. This will have a significant boost to the bottom line as well as a boost to employee morale.
2. Recruit talent.
If you work in human resources, you may recruit a talented salesperson to grow the customer base of the company. Or, you may find a way to reduce costs of the company health insurance by creating an employee wellness program.
3. Take time to develop your brand story.
Clients are more likely to work with a business they recognize. Develop your brand’s story and show what goes on behind the scenes. Take the time to form a solid relationship with your clients. Publicize your company on social media to educate customers and employees about your products and services.
4. Get the most out of your real estate.
Analyze the current use of your physical space. Identify overflowing storage, too many supplies, piles of paper files, inefficient furniture and equipment placement. Centralize or consolidate the space necessary for production. Look for opportunities to lease unused space. Or, negotiate a rent reduction with your landlord.
Look for ways to cut expenses.
Eliminating excess costs is equivalent to earning revenue. By minimizing costs through increasing efficiency or reducing waste to the bottom line, the value of the company should increase.
1. Keep goals clear and focused.
You cannot expect employees to be efficient if they don’t have a coherent goal to aim for. By having a clearly defined and achievable goal, employees will be more productive.
Look for strategies to create goals within your department and share with your department head what is working for you. Your company may find your contributions making positive waves throughout its culture.
2. Recognize time is money.
Efficiency with how you use your time on company hours can directly impact the value of the company. If you were able to trim two hours a month on the production of a report, that’s 24 hours saved every year. Automation, using the correct tools for the job, templates, and other time-saving tools will help increase efficiency while saving on the bottom line.
3. Reduce turnover.
While recruiting talent increases revenue, reducing employee turnover decreases the bottom line. Hiring and training a new employee takes time and it impacts workflow. The best way to keep your best workers is to identify what is causing them to leave. Then, create a strategy to repair those pain points.
4. Reduce waste.
The most effective way to reduce your company’s waste is to generate less in the first place. Waste prevention offers the greatest environmental benefits and cost savings.
Depending on your department, your waste-saving efforts may look different. Here are a handful of ideas:
Group shipments to customers to cut costs.
Maintain computers to lengthen technology life while optimizing efficiency.
Shop around and compare prices. Then ask your current supplier to match the most competitive rates.
Go paperless wherever possible. Having an efficient digital organization process in place for internal document sharing will reduce paper waste and make it more efficient to find the information needed quickly.
Modernize your advertising and marketing efforts by increasing social media use and reducing traditional marketing. Capture leads on platforms like Instagram, Facebook, Twitter, or YouTube.
Use virtual meeting technology to reduce costs. This can minimize travel expenses (and time), eliminate the need for physical space, and reduce the amount of office essentials such as ink, printer paper, and postage required to run your company.
Work together to build wealth.
Active participation as an employee owner not only helps your company to grow and succeed. This brings value to your customer. And this, in turn, should add value to your company stock. And by adding value to your company stock you will grow your wealth and the wealth of your fellow employee owners.
Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals?
If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you.
Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.