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Offering A Minority Stake In Your Biz

Monday, November 2, 2009

(GIFTBEAT)

For retailers on the track to expansion, a minority stake in your store can prove attractive to would-be managers. Andy Buyting, owner of two Green Village Home & Garden stores in New Brunswick, Canada and author of The Retailer's Roadmap to Success, discusses the opportunity to bring managing partners onboard.

To create a unique way to enable business expansion, give managing partners minority stakes in your retail operation. I took this model from Outback Steak House, a restaurant chain that from 1994 to 1996 changed [its managers] to managing partners. Out of 1,600 managing partners at Outback, only two didn't renew their partnerships at the end of their five-year contracts.

Managing partners typically own between 10%–20% of the companies they're operating. It's not a huge amount of money because shares are bought at discount. But it is big enough to hurt and to matter to those who buy shares. And, there is a huge potential in profit sharing, bonuses and an increase in the value of shares.

This is not practical for all small retailers, but if you want to semi retire, hire the best staffers and start selling them shares. This can even be offered to family members. I am amazed by how many candidates I've interviewed who have been interested and willing to invest in my business—an initial investment that could be north of $20,000. This is what has made expansion possible for my business. My plans are to construct a third location in 2010. I want to get to the point where I open one store every year, and then two per year.

Note: Buyting's book can be purchased at amazon.com. Buyting can be reached at andy@retailersroadmap.com.

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