What really makes or breaks a business is the team behind the transactions. When you put together a great workforce, that has measurable value to potential purchasers.
But, how do you place a dollar value on your workforce? Can you really use a business valuation calculator to figure out how much your employees are worth? Let’s explore the aspects involved.
Consider the Cost of Recruiting
Not only do you have to pay for your current employees, but if you lost them, you would have to pay to recruit someone else. Trying to find the perfect person to fit the job can be difficult.
Choosing the wrong new employee can ruin your productivity, the morale of your workforce, and destabilize your systems. Part of the value of your workforce is the fact that they are already there, trained, and producing products.
Potential buyers will want to be sure that your employees are staying on through the transition. The last thing they want is to get hit with a lot of recruiting costs directly after making their purchase.
Consider Their Salary and Benefits
The easiest measure you can use for creating a valuation for your workforce is adding up their salaries. But, in reality, that only tells you how much you are spending on your employee’s pay, not what they’re worth.
When you place a valuation on your workforce, you should always start by adding up the cost of their salaries plus benefits. But, also think about what you might be willing to pay someone to do the job as well as possible. That’s the number that you should be using when you sell your workforce to someone else.
Consider How Expensive New Hire Training Is
Training your new hires is a time consuming and expensive process. You will have to register them in your systems, get them uniforms, and introduce them to every aspect of your company. Don’t underestimate the value of your workforce by forgetting about the cost of new hire training.
Potential buyers will be thrilled to find out that they don’t have to worry about training a bunch of new hires. Make sure you advertise your staff’s talents and abilities so that they can see their value.
Consider Their Productivity
The more productive your employees are, the more value they have for your business. After all, the more they produce, the more money you make.
If you have a super productive, top-notch workforce, then you have something of very high value to potential buyers. Consider this productivity to be your competitive edge when you go to sell.
How to Value a Business’s Workforce
Trying to calculate the exact value of your workforce is nearly impossible. After all, you never know what the true cost of hiring a new employee will be or how losing an old employee will impact your productivity.
But, when you put your business on the market, it’s important that you highlight for buyers that you have a ready-made workforce that is trained and ready to perform at maximum productivity. That’s what will ensure your business is sold quickly.
I know how to present the value of your team to potential buyers. If you’re looking for help creating a valuation for your workforce, contact me today.