Labor Market Struggles
Given the current labor market, many business owners have labor and hiring at the top of their mind. It’s no secret that it’s an ongoing struggle for both large corporations and small businesses nationwide. I won’t go into the why in this article, but I will dive into how you can mitigate the labor market’s impact and better position your organization for future sale.
A lot of time, money, and unnecessary stress can be saved by taking two “simple” steps. First, companies that invest their efforts into comprehensive training programs tend to see better long-term retention, higher productivity levels, and reduced costs in hiring. The quantity in which each of these areas is affected will be different for each organization but consider the impact of simply reducing how much is posted on job boards. Do you feel like you’re just blasting money into the void with little to no return on job postings? You’re not alone. I personally experienced this last year with the company I have ownership stake in, so I definitely feel your pain.
Depending on your spend and urgency, posting a job online with one of the job boards (Indeed, Career Builder, ZipRecruiter, etc.) costs on average $300-$500 per month. There will be some variance with cost when it comes to either clicks or amount of times it is viewed by potential applicants. External recruiting can lead to a cost of $20,000 or more just to fill one position. Again, the “necessity” of each will depend on company needs. It is not uncommon for small businesses to have only one or two people designated for human resources, with others outsourcing it altogether for reduced cost.
The Benefits of Comprehensive Training
That having been said, I wanted to provide a bit more context and clarify the need before getting into comprehensive training programs in detail and why this matters for the current labor market. An article or so back, I recommended creating an operations manual and talking to departments about what they need to do on a weekly, monthly, quarterly, and annual basis to create an operations manual. This is the point where that endeavor will come in especially handy. Re-engage those same individuals and have them create a workflow as to how each of those tasks should be completed. Some companies will need to take this information and create actual training videos or programs, while others will simply need to have a written process for new hire review. Again, every business is different and it will depend on the complexity of the position and process. There are a ton of sources online for examples or services to help with this.
The long-term benefits of comprehensive training typically far outweigh the upfront cost of putting it into place. Not only is management freed up to actually manage and ensure that everything is running smoothly, employees have less stress because they know what they are supposed to be doing and how to do it. In an age where company culture and employee satisfaction matters, those who are content are more likely to stay. While we can’t give everyone the moon, there are definitely some simple things that can be done to help improve overall morale.
The Need for Clear Job Descriptions
Moving on to the second step, it is absolutely mandatory (my rule) to have all job descriptions written out and easily accessible. For my company, we keep these inside of the operations manual on a shared drive so that anyone in management can easily access them at any time for whatever reason. There’s a whole slew of benefits to doing this, but the biggest ones include clearly defined roles, responsibilities, and expectations, as well as simplification for anyone to immediately share the position description when the position becomes vacant. As always, time is of the essence. The quicker we can get a position filled, the less money we lose in the process. Be sure not to fall into the trap of making the descriptions overly complex with skills or work history requirements that aren’t realistic for the position. Many employers lose out on potential talent by making “must-haves” completely unattainable. Be mindful of the labor market and competition for employees. Don’t lose out on good talent by overcomplicating the hiring process.
The Next Level
If you’d like to take all of this a step further, think how simple it would be to promote someone up within an organization if the role is already clearly defined and the training is in place for them to move into the position smoothly. While there will still be a degree of on-the-job learning, which is true for most roles, it’s still possible to provide employees with a majority of the tools they will need to perform successfully. Additionally, job descriptions can be the basis for implementing reviews to see how well a person is completing the tasks within their current position, and then utilizing those reviews as part of pay raises or promotions procedures. On a different note, job descriptions with comprehensive training and ongoing education will create a better equipped workforce that operates efficiently and can respond effectively to changes the organization encounters no matter what the current labor market looks like.
Prepping for Sale
When it comes to selling a company, most buyers that are actively seeking out businesses for purchase aren’t wanting to get into a mess. Typically, they see the value that the company offers and want to utilize existing systems and processes, with some slight tweaks, to take that business to the next level or create synergies with another company they already own. Business that are able to do a simple trade-off with a short transition period are much more likely to sell, and at a desirable price point, if they’ve done the work to make this happen. Picture again, the house metaphor from my first article. Your primary goal should be to offer your buyer a fully furnished and functional home where all new ownership has to do is sign the closing documents, take the keys, and walk inside.
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Written by Joseph L. Fleenor, Jr. MBA MSA
As Mergers & Acquisitions Associate with Indiana Business Advisors, Joseph assists advisors throughout the entire transaction process. With his formidable experience in M&A, Joseph is able to inform all stages of the process, from initial valuation, estimates, through due diligence documentation and final purchase. When he’s not doing a deep dive into company financials, Joseph is working hard to ensure that IBA finds the right buyers for our client’s businesses by prepping informational materials and creating targeted marketing lists. As a fellow business owner and prior consultant, Joseph understands the intricacies and complexities that come with navigating corporate finance and strategy.
Joseph comes to IBA with a strong educational background. Joseph earned his Bachelor’s degree from Wabash College in 2012, Master of Business Administration in International Business and International Finance from Butler University in 2018, and Master of Science in Accounting from Purdue in 2021. In addition to his degree, he has a Financial Modeling & Valuation Analysis Certification and is working toward CFA level 1. Before becoming involved in the financial and investment industries six years ago, Joseph did a term in the United States Army as a multiple launch rocket system crewmember.
Indiana Business Advisors is the top business brokerage firm in the state of Indiana and one of the largest in the Midwest. Whether you are looking to a buy a business or sell a business, Indiana Business Advisors has the expertise and experience to get the deal completed. With over 40 years of history and 2200 businesses sold all over the United States, our team will work diligently to achieve your professional and personal goals.