Are you a business owner planning to use your business value to fund your retirement? Seventy percent of business owners do. If you are one of them, you need to understand how your business value is determined. An important part of the calculation is capital, or the assets used to generate revenue. This could be your building, equipment and even money in the bank. According to the Exit Planning institute, there are Four Intangible Capitals, harder to measure than physical capital, that contribute to your business value. They are: Human Capital, Customer Capital, Social Capital, and Structural Capital. Let’s talk about Human Capital, or the value of your team.
Clearly articulating a vision and core values for your company gives direction to who you hire. You’ll want to hire people who can support the vision and who espouse the company values. Next, think about talent, grit, and emotional intelligence. These qualities add dimension to your team. You will need your team to get along well with each other, so communication skills will count as well. Beyond finding talented, dynamic people, a well-organized recruiting and onboarding process will go a long way to creating a positive employee experience. Benefits, clear roles, and opportunities for development will help with retention and a succession plan can make sure key employees stay if the owner exits.
Other ways you can improve the Human Capital in your business are to check some numbers. Look at employee turnover in your organization. Figure out why employees leave and consider if you need to improve internal processes, communication, or role definitions. You might also ask yourself if your wages are competitive and if your managers are adept at handling and developing the people in their care. Consider creating pathways for growth so employees know how they can grow. Hold employees accountable to KPIs to help them improve the ownership of their work and to promote initiative.
If you are struggling with human capital or new to thinking about how to improve it, start small. Choose one area to work on at a time. You might want to hire a value growth advisor, who can help you create and action plan to help you get your human capital to the needed level for when you sell and exit. The bottom line is that maximizing your business’ human capital will help you with a successful exit, will help the business continue to thrive, and will create an environment where everyone can succeed, including those in your succession plan. When every employee feels valuable and integral to the company’s success, you’ll have created strong human capital which will add to your business’ value.
**Maximizing Human Capital for Business Owners**
Planning to fund your retirement with your business? 70% of owners do! A key factor in your business valuation is **Human Capital**—the value of your team.
**Build a Strong Team**
- Hire to align with vision and values
-Hire for talent, grit, and emotional intelligence.
- Foster teamwork, communication, and growth through clear roles, benefits, and development opportunities.
**Improve Retention**
- Monitor turnover and feedback to enhance internal processes.
- Offer competitive wages, growth paths, and use KPIs to help support employee success.
**Start Small, Think Big**
- Struggling with human capital? Hire a value growth advisor to create a plan for a thriving team and a successful exit.
Invest in your people—they’re integral to your business’s value and future success!
Have questions? Call me at 602-923-9800 for a complimentary consultation.
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