Confessions of a Former Buyer: Pay Your Staff Fairly and Normally
Many owners develop pay systems that become confusing as they grow and often don’t perform reviews in a consistent manner. This can be very challenging to explain and not easy for a potential buyer to handle. I have seen owners paying for things like employees’ personal vehicle’s fuel, excessive benefit coverage, and even day-care.
Rarely does a small company have an HR person to help organize these matters. They still need to develop some documentation on how people are managed and compensated. When the owner is compensating in obscure ways it may confuse several buyers who then feel increased risk with the deal.
Most owners never set aside the time to set this up and could consider paying for a part-time HR person to keep them on track and assure things are done correctly in a timely manner. I bought a business once that required I hire the owner ‘s daughter; she needed to bring her dog to work every day. She was a good employee and I love dogs (as did most of my staff)—but having them at work wasn’t feasible and fair to other dog owners.
Routinely updating and reviewing how you pay is recommended. Employee compensation is not likely to stay the same for long periods of time. Employees are your highest expense item and your most important asset.