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Thread: Business topic that i would appreciate some hearing your views on.

  1. #1
    Join Date
    Jun 2008
    GTA Ontario Canada

    Business topic that i would appreciate some hearing your views on.

    I am doing some research for myself which is the general motivation for this thread but i would like to ask for input here from anyone who works for a privately owned company typically with a single owner and has done so for most of their life. They may have worked at several different small businesses not just one.

    I would like to hear thoughts on how you would feel were the owner of the business to come along one day and offer you shares in the business.

    I dont wish to lead your thoughts so i would like to hear how you would interpret this and what you would see the implications being to you in the business in the short term and long term.

    Then if that same owner were to offer you a profit sharing scheme as an alternative to the shares what would you prefer and whats your reasoning behind your thoughts.

    What i am after is trying to get a view of how guys in our demographic group would percieve these two elements within their working time at a company.

    If you would prefer to respond privately for some reason hey pm me but this is just a general discussion i am merely trying to gather different views on how these elements are viewed outside of my own head and thoughts. So their aint no right or wrong answer just your opinion.

  2. #2
    Join Date
    Nov 2006
    Delton, Michigan
    well rob can we add to this mix that they present owner was a fair and trustworthy,, because some are not and have other motives..

    given this addition, i would think that either option would make the receiver of this option, a reason to do more and try harder to make it work. also i think the majority of folks i am close to in a similar income level, would prefer the profit sharing set up.. todays stock outlook isnt real good and to many have lost a large portion of there investment from the loss of value in the they seem to tend to get a dollar in there pocket rather than piece of paper saying you got so many shares of company ABC..
    If in Doubt, Build it Stout!
    One hand washes the other!
    Don't put off today till tomorrow!

  3. #3
    First thing I would think of is he has a problem with cash flow if he is all of a sudden offering shares of his privately owned company. I would need to see the books and see his projections for future work and or business.

    You also need to look at the personality of the person making you this offer. Is he willing to listen to new ideas and possibly incorporate them or are they the type to agree with what your saying but in the end blow them off.

    I would opt for profit sharing if I was working for the company.

  4. #4
    Join Date
    Jul 2011
    The Gorge Area, Oregon
    Quote Originally Posted by larry merlau View Post
    well rob can we add to this mix that they present owner was a fair and trustworthy,, because some are not and have other motives..
    +100 on this. If you are a partial owner you are also potentially partially liable for debts (not a lawyer, depends on business structure, ymmv). I've heard stories of a specific type of business that is usually structured as a partnership suddenly offering shares to junior members when they face going under to spread the debt.

    I would generally consider the motives of the owner and what the perceived benefits are. If the owner is older and considering retiring, offering an ownership interest could be a way to start transitioning ownership of the business (I had a similar situation to that that I ended up passing on for various reasons). It could also be as part of a "vested interest" plan, I've considered a particular venture several times (but keep chickening out ) and would definitely consider offering partial ownership or at least profit sharing to key employees who make the business what it is. Its a good way to keep good employees vested in the business and provide them with a sense of ownership and pride. A local brewery did very well doing this and has produced a lot of successful alumni who eventually sold back their shares and moved on to other ventures. In that case it was also a way to keep initial salaries manageable, you take a cut now in the promise of growth later.

    For the shares, in this case I don't believe it sounds like you're considering the "stock value" in the stock market sense so the actual valuation of the stock is mostly meaningless, except for a couple of key items: can you sell it back and if so have you agreed on a value ahead of time? Presumably you would get some percentage of profits (if any) or there is some other long term strategy towards which you are working (otherwise its just paper, I've also had that... made nice fire starter ).

    Profit sharing is relatively straight forward, except if it is structured to adjust your bottom line down in the case of poor revenue (i.e. we're cutting your base by 50%, but hey you get 25% of profit - oops we have no profit... hey look you just got a 50% pay cut).

    Sorry if we're all sounding so negative, either can be a great deal; but the downsides are where there are downsides so naturally that's whats going to come up first.

  5. #5
    Join Date
    Dec 2006
    RETIRED(!) in Austintown, Ohio
    Are you being offered an ownership (profit or loss) share in lieu of a wage or salary? If so, make sure you see the profit/loss history for the past couple years. If your share of profit is less than your current wage/salary, then take a pass.

    Are you being offered a share as a bonus? Again, make sure the share doesn't expose you to company debts.

    Is this a privately held corporation (An "S" corp or LLC in most U.S. states)? If so what is the value of the shares offered, and or, will this include a partnership or corporate officerdom? If it makes you a partner, then you might have some liability exposure.

    If the shares have monetary value, can you sell them to a third party?

    All these questions need answered befor you jump in. All the questions in previous messages here are also quite valid.

    Do your homework!!
    Jim D.
    Adapt, Improvise, Overcome!

  6. #6
    Join Date
    Dec 2006
    Yorktown, Virginia
    Had it happen to me. I gave boss notice I was moving on and was offered a 25% share of the company and a raise if I stayed. I declined the offer and six months later the company went under. I believe it was headed that way anyway, which is why i left. I found out later there were no profits to share and the boss had been working without a salary for months.

  7. #7
    Join Date
    Jun 2008
    GTA Ontario Canada
    Ok this is as i said research. No applicability to me.
    See what i am getting at is what Larry was on about. In my view, should a owner reach the point where they are stepping out or down from a going concern but the business is a privately owned business imho offering the staff the shares and consequential ownership is not something i belive most working people want.

    I think a profit sharing scheme where their participation means more money if compnay does well is a more meaningful proposition. Imagine for a minute that your colleagues suddenly become your fellow shareholder and one of them is elected through the bunch of you voting to have that person suddenly lead the company.
    Now what.? How would you feel?
    Also in a private company you are not generally free to sell your stock to anyone. Typically you end up selling it back to the company that is if the company can buy it. If its a small amount anyway and the company dont want to buy it few others would buy into a private company when its a small stake.

    See there also potentially comes a time when as a group of workers you may have to be prepared to take on the liability of a line of credit for the company so would you still want stock in the company ?
    My question has nothing to do with who or what the owner is or the company is about and more about the fundamental difference between the worker and the business owner.

    One party has taken a risk to have the freedom to chart the company course and the other has surrendered this freedom for a theoretically constant income.
    Offering shares to the worker when said shares are not able to be easily traded at will is a total dead horse in my view.

    Few people realise that even stocks that are listed in some cases might mean you as a shareholder have to ante up with more funds even tbough you dont have a liability to do so. This often happens simply in a disguised form through dilution where the company issues more shares to raise capital. Your share becomes worth less per share by and by default you put money into the business even though you did not write a check.

    With this insight and current owner out of the picture what say you now to the idea of having shares given to you in that private company.?

    Like i say this is research on my part to get a sample of views of people that have worked for a boss all their life rather than been their own boss or self employed.

    Sent from my MB860 using Tapatalk

  8. #8
    Join Date
    Mar 2007
    Escondido, CA
    I don't fit your original profile, Rob, but I experienced a similar perspective and have an opinion, which you are free to disregard. I was laid off from the telephone company in the early '80's at an age where getting another job was problematic. Coupled with a body of knowledge for which there was no current market, I was forced to become self employed. The only thing in which I had knowledge and tooling was woodworking. I was also gifted in people skills, writing, marketing and teaching skills. I knew zip about money, investing, estimating, inventory control, purchasing power, and gazillion other things I had to learn on the fly. My shop was too small. I didn't have sufficient storage or assembly area, and I was missing some key machines.

    The skills and interests that it takes act in the capacity of the owner are significantly different from that of a salaried or hourly employee. I was ill-equipped to be self-employed, but because I had no other choice, I had to acquire the knowledge needed or fail, losing my house and likely becoming homeless. I was never very far away from that reality for decades. I also did not have a family to support.

    FWIW, I believe that the skills and experiences of employees do not prepared them in any way to operate a company, whether it is a sole proprietorship or employing numerous other workers. The fiscal, marketing, sales, strategy, planning, forecasting, and many other essential components of a successful business are overwhelming for one person, let alone for one also doing a job before acquiring a controlling interest.

    Further, I think that a business that wants employees to take shares in lieu of either raises or benefits is gathering rats for the sinking ship. The comments made earlier with regard to liability and such ought not to be lightly dismissed.

    I managed to not starve from then to now, but I took on many different things to keep bills paid and beans on the table. I started with building furniture, but also had to invent, manufacture, and market tools, teach in the classroom and my own shop, write a book, and go on the road to do paid demonstrations and presentations, and that didn't happen until I had developed some recognition by others. The business doesn't have to be woodworking, but flexibility applies to all ventures.

    My two cents.

    Some say the land of milk and honey; others say the land of fruits and nuts. All together my sort of heaven.

    Power is not taken. It is given. Who have you given yours to? Hmmmm?

    Carol Reed

  9. #9
    Join Date
    Feb 2007
    As has been already mentioned, I would first gather all accounting information about the company, second I would find out up to what extent I would be able to influence the decisions of the company or if I would be only an investor with no power at all.
    And last but not least, if I thought it was worth, I would think why I hadn't thought about making the same proposal to the owner, instead of waiting for him doing it.

    I don't know about US, but here there is a type of bussines called "Cooperativa" where all members are owners, and share benefits and risks, on top of that the "Cooperativa" can hire workers of any level, even general managers that are not members. I know that there are different legal kinds of those Cooperativas depending whether they have a limited amount of owners, wheter the owners respond with their own capital or only with the capital invested and so forth but my knowledge of those details is nil.
    Best regards,

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    I also dream of a shop with north light where my hands can be busy, my soul rest and my mind wander...

  10. #10
    Join Date
    Nov 2006
    Mountain Home, Arkansas
    Toni, we have some 'co-ops' in the U.S. Some are successful and some aren't. Farmers often form coops for selling grain and such. There are also employee owned businesses that can be successful. As you say, the bewildering maze of laws is a big factor in forming, or maintaining, a company.
    "Folks is funny critters."

    Think for yourselves and let others enjoy the privilege to do so, too. ~Voltaire

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