Updated: August 13, 2024
Ask ACE
Ask ACE: How do we increase company value so ESOP shareholders benefit?
By Priscilla Hansen Mahoney, Blazing Trails Coaching
Q: We have an ESOP. How do we increase our company value so that all of our shareholders benefit?
ACE Advises: Members of an Employee Stock Ownership Plan are vital stakeholders, regardless of their position in the company. Their contributions influence the company’s valuation, share value and personal financial prosperity. Increasing an employee-owned business’s value maximizes benefits for employee-owners. Here are some effective strategies.
People
Build a strong leadership team: Foster a culture of collaboration and innovation through regular leadership meetings focusing on driving the company forward by increasing revenue streams, reducing waste, managing risk, and maintaining cash flow.
Customer relationships: Cultivate strong customer relationships to enhance loyalty and brand reputation.
Nurture and train employee owners: Encourage an ownership mentality, involve them in decision-making, and provide growth opportunities.
Plan
Create a plan: Develop an annual strategic plan with the leadership team to drive growth and profitability.
Develop and document processes: Your procedures are your tactical plan. Establish clear, repeatable procedures and implement a robust training program.
Communicate the plan: Keep employees informed about plan and progress and ESOP health to maintain engagement. Do not forget that they are a valuable source of tactical ideas.
Profits
Diversify and strengthen revenue streams: Expand market reach by increasing brand awareness. Diversify your products and services.
Reduce waste and maximize efficiency: Optimize asset utilization and streamline processes.
Mitigate risks: Identify and address potential strategic, operational, financial, compliance and reputational risks to profitability.
Maintain healthy financials: Remember that cash is king. Healthy cash flow is key to both profit and equity value.
According to recent research by the National Center for Employee Ownership, employee owners tend to have higher wages, receive larger retirement benefits and are less likely to lose their jobs during economic downturns. When the company thrives, they share in its success.
ACE member Priscilla Hansen Mahoney, founder of Blazing Trails Coaching LLC, offers practical, down-to-earth business strategies for contracting businesses and their teams. Blazing Trails Coaching is a proud sponsor of the Maine ESOPs Conference, which focuses on providing education, networking, collaboration, and advocacy for Maine employee-owned businesses. Learn more at www.blazingtrailscoaching.com.
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