The US is opening. The EU is opening. And the owner of a painting company told me he could do twice as much work if he had more (good) employees. Owners of electrical contracting businesses, hospitality, manufacturing, and other owners have said the same thing. No matter how open the governments make it there still must be willing and capable people to work.
Publications from the Puget Sound Business Journal, to the New York Times, to the Wall Street Journal and everyone in-between regularly have articles on the job market. Bottom line, it’s an employee friendly market. Some of the facts:
- Four million people quit their job in April, an all-time high (NYT, June 19).
- Retirements escalated during covid and those people are not un-retiring (WSJ, June 17).
- Up to one-third of tech workers plan to do a job search this year. (WSJ, June 19).
- People saved money over the last year and some feel they have a cushion to get the job they want versus taking what they had (NYT, June 19).
- It’s an incredibly tight job market (WSJ, June 21).
- Being able to work remotely at least some of the time will influence employees staying or leaving (PSBJ, June 16).
One of my top four things an owner should do to increase value is, “Show you can attract and retain good people.” The above statistics says this is more important than ever. Heck, in some places fast-food restaurants are offering incentives just to be interviewed.
Yes, I know some of the not-returning people have underlying conditions and some are getting as much or more money being unemployed, but what I’m seeing a lot of is a mismatch between skills and openings.
A client company is treading carefully on returning to the office, office protocols, taking PTO, being vaccinated, and all other aspects of work given there’s a lot of burnout. Many people worked harder than ever when working from home, didn’t see much of others, and didn’t travel. They now want to catch up and if their current employer won’t give them the freedoms they want they know another company will.
The above are facts and the question is, what do all these facts mean to small business owners and buy-sell deals?
- Anybody with office employees (not in the field like tradespeople, delivery people etc.) should do all they can to make sure their people have some life balance. It’s tough to find good people and now is not the time to be shorthanded because there’s a lot of business to be had. An example of taking care of people is our recent mega-heat wave in the Puget Sound area. I know of businesses that closed to protect their employees, monitored the effect of heat on people, and changed hours to let them off before the hottest part of the day.
- For owners planning a transition my advice is to pay attention to what’s in the paragraph just below the above bullet points. Attracting and retaining good people is always an issue, always. On a buy-in deal I’m working on the owner/seller keeps saying, about employees who bid work, “any monkey can do this job.” Funny how he’s had to go through a lot of “monkeys” before finding some people who can correctly bid and get good jobs.
- For business buyers, if employees and the management team weren’t on the top of diligence topics they better be now. Many employees fear change, not realizing the buyer wants them more than anything as what they’re buying is really the people. Buyers should be concerned about the pay scale (is it fair or under market), benefits, which must be competitive, work-life balance (I’ve had three clients in the last year tell me about people who left for lower paying government jobs because of a predictable and consistent work schedule.
Successfully operating a business is not easy, which is why there are ample rewards when done right. And buyers want those successful businesses, which leads to another reward for the owner/seller.