Welcome to the podcast focused on business buying strategy where you find all the very best information on how to buy and sell businesses and become a dealmaker. In Business Buying Strategies podcast #11, Jonathan Jay from The Dealmaker’s Academy covers:
- The exact process business investors Paul Green followed when selling his first business
- How to use LinkedIn more effectively with expert Andy Gwynn
- The HR and people management issues you might face when you buy a company
Listen to find out:
- The meetings Paul Green and his broker set up with prospective business buyers
- Why it’s up to the business owner to do most of the preparation
- The mistakes Paul admits making and the lessons he learned from his first business sale
- The three things your LinkedIn profile must achieve
- Why you need to use a strategic approach on LinkedIn
- Why your LinkedIn profile is so important
- Why you need to forget about only connecting with people you already know on LinkedIn
- How to make thousands of connections on LinkedIn
- Why you need a corporate looking photograph on your Profile
- Where else to use your photograph and why you should
- How to use LinkedIn to create rapport with business owners
- Why your Profile headline is crucial to your success
- What your headline should reveal about you
- Why your headline needs to explain what you can do for your audience
- Why your Profile summary needs to tell people how they will benefit from working with you
- What to write in your experience section to engage with your audience
- How to create an experience section when you have multiple interests
- Why you don’t need to include every job you’ve ever had in your experience section
- Why you need to shift to a marketing mindset when using LinkedIn
- How to create value by sharing valuable content
- Why sharing valuable content will help to establish your credibility and value with your target audience
- Why you should post video testimonials on your YouTube channel
- Why having a YouTube channel will help you to get found by your target audience
- Why so many business owners are petrified of TUPE
- What every business buyer needs to know about TUPE before making a bid for a company
- Why TUPE is so useful to prospective business buyers
- The key to success with TUPE
- What to do if you discover an employee has benefits that aren’t in a written contract
- How a warranty may offer you the right to offset additional undisclosed costs
- How some organisations may contribute to the cost of redundancies
- When you should bring in an HR expert to consider the potential liabilities
- The process an HR expert will follow when you acquire a business with employees
- Your TUPE obligations as the owner of a business
- The fastest and least riskiest way of shedding staff
- How to make voluntary redundancy a more attractive prospect for employees
- The difference between notice pay and redundancy pay and why it matters to employees
Read the Transcript here:
Hello and welcome. This is Jonathan Jay from the Dealmakers Academy, and welcome to Business Buying Strategies, the Podcast where you’ll find all the very best information on how to buy and sell businesses and become a deal maker. Welcome to Episode 11.
This week we’ll be hearing more from business investing entrepreneur, Paul Green, and about the exact process he followed to sell his first business successfully.
I’ll also be introducing you to Andy Gwynn, a colleague who knows more about how to use LinkedIn effectively than anyone I’ve ever met.
We’ll continue our short series on the HR and people management issues with my HR specialist, [?Kelly 0:00:48.2]. So, if you’re ready, let’s get started. So, last week, we heard serial dream maker, Paul [?Dream 0:00:59.0], explain why he decided to sell his first business using a broker and how that relationship worked.
This week Paul explains the steps he took to make that first sale. So when you were doing the management presentations to the potential buyers; who was doing the pitching? Was it you or was it BCMS?
No, it was me. BCMS were great; I was assigned a guy called Andy. Andy’s lovely, but after me having spent about 40 or 50 hours with him – mostly in bars, actually; he really liked going to a bar afterwards – he was like, ‘Let’s go and have a beer to celebrate.’ Celebrate what? We’d had a meeting? I was doing all the work; he was there to make sure they got the fee when the sale went through.
Maintain the relationship?
Exactly. I realised, after about the fourth pitch: I’m doing all the work here – as is right, I was the business owner; it was my baby: I’d written the information memorandum; I’d done all the work on that. I asked Andy one day, I said, ‘So why do you come with me?’ and he went, ‘Oh, well, you know, we’ve got to make sure we maintain the integrity of the relationship, duh-duh-duh…’ I realise now, he was there to make sure that I didn’t do a deal with someone off the books and wait however many months to get out: because you sign a contract. When you sign up with someone like BCMS, or any broker, you sell your business within the period of that contract, they get the fee, whether they’ve done the work or not. Now, I will not criticise BCMS publicly – or privately: they did a great job, they sold the business, they got me out of that business, they put some money in the bank.
Well, they did exactly what you paid them to do.
Exactly. Would I use BCMS again? No. Would I use any broker again? No; because, having seen how they did it, I could replicate that for a lot less than £10,000, and for a lot less work – and, frankly, I could do a lot less meetings with dickheads. If you look at: why does anyone hire a broker? Why does anyone hire anyone? Because they can do something for you, or they’ve got a process to teach that you’ve never done before. If you’d said to me before – if you’d challenged me before – because Jonathan knew I was putting the business up for sale before anyone did. If you’d said to me, ‘You should just do it yourself – which you probably did – I’d have laughed at you; because it’s like anything, when you haven’t done it before, it seems scary. It’s only having done it… I thought that the broker would hold my hand a lot more through the due diligence – which was hell, it was utter hell – but they pretty much just… They acted like an estate agent, actually: you know when you sell your house? What does the estate agent care about more than anything else?
The reason, when the estate agent rings you to ask you to ring your solicitor; it’s not because they’re concerned; they just don’t want the chain to collapse. Again, without downplaying BCMS, because they did a great job – and I think I’m a testimonial on their website as well; so I don’t want to go against that; because I stand by every word, whatever I said, two years ago when I gave it to them – but they were just there to keep the chain going. You could replicate that yourself, if you had a right-hand person who can make phone calls for you; you can make phone calls yourself. At the end of it, the eventual acquirer and I ended up pretty much on the phone to each other about 18 times on the last two days before it went through. He was literally sat in his solicitor’s office, and I was ringing my solicitor. Those were probably the two angriest days of my life, actually, just through solicitors and not [over speaking 0:04:27.3].
One thing – because you know Michael…
I didn’t use Michael, and that was error number… You name it, I’ve screwed it up in everything, right: starting a business, running a business, growing a business, selling a business, acquiring businesses – as I’m doing now. I seem to be a walking case study in ‘how not to do it’. So it’s quite nice to actually still be alive and the other side of it. I didn’t use Michael. I used a lovely expensive firm, which I won’t name. They were perfectly good, and I paid eight and a half grand – and Christ, they made a lot of money off me; a lot of profit off me, because I think they did most of the work in the last two days. It was so ridiculous that at 6 PM on the day that we eventually completed, one of the junior legal guys rang up and said, ‘Hello.’ ‘Hello.’ ‘I’m just calling about your sale of…’ – insert company name – ‘to…’ ‘Yes, I know which one it is. I’m only selling one business today.’ ‘Okay, so I just need to ask you some questions about the freehold.’ ‘The freehold?’ ‘Yes.’ ‘The freehold that’s reflected in the lease document?’ ‘Oh, you lease the building, do you?’ It was that level. That was literally four hours before it went through.
They let you leave a personal guarantee on something, wasn’t it? [Over speaking 0:05:38.4]?
Oh God, yes. Well, they fixed it eventually, but…
I don’t think eight and a half is a lot, really, for a business.
No, I don’t.
Well, it is from what I think. Anyway, I was with Santander and I had – you know how you forget? – you just throw out personal guarantees and stuff to get what you need? We had a loan and there was an overdraft – obviously, there was nothing on the overdraft – and the loan [unclear words 0:06:07.7]. Anyway, I was a personal guarantor on the Santander, and somehow it had been missed, that I was this personal guarantor. So we had this letter from the acquirer saying that he would guarantee the loan; but somehow it never reached Santander. I got a letter from them six months afterwards referring to this, and I rang them up, but Santander wouldn’t talk to me about it because I was no longer named on the bank account. I had this bizarre – I wish I’d recorded it – this bizarre 45-minute conversation with this guy saying, ‘Right, if someone defaults on the loan you’re going to come after me?’ ‘Yes.’ ‘But you won’t talk to me now before the default has happened?’ ‘That’s right.’ It was a very bizarre conversation – but the lawyer, when I rang the lawyer and said, ‘Oh, this has happened,’ I could tell by the urgency in her voice of, ‘Oh, we’ll get this all sorted,’ that it was something that should have… They’d missed that along the line.
Those are the sorts of things that should never happen…
Yes, exactly, yes.
…if you’ve got the right – we talk a lot about having the right deal team and the right people [over speaking 0:06:59.6].
I do now use Michael. I used him… I have some property – I’m doing some build to rent – involved in a partnership agreement for that. We’ll shortly be getting a phone call about my next project.
We’ll be hearing more again from Paul next week. Now, back in episode six, I explained why it’s important that you update your LinkedIn profile to be taken seriously as a business investor.
Several listeners have asked since that we consider LinkedIn in more detail. So, at a recent mastermind group, I was delighted to introduce my audience to LinkedIn guru, Andy Gwynn. Here, he discusses what content you should add to your profile and why.
So, at the speed of light, there is two sides to LinkedIn. You will want to make notes. Your profile has to do three things: it has to get found, it has to give value to the reader… We’re in the fastest time of our lives.
I’ve just been talking to a guy who owns a print business, saying everything’s digital, everything’s so fast. Your buyers, your people are in the digital age now, aren’t we? Your profile has to give value and it has to prove your credibility. I think that’s important if you’re going out to people saying, ‘Sell me your business.’ ‘Why should I? Who are you?’ So it has to get found, give value, proof, credibility.
The second part of the glue is your strategy: what do you do to go and find, connect in the right way and engage with your ideal contact? I say contact: it could be clients, it’s people wanting to sell their business, it’s all sorts of other professionals as well. There’s no point going out to engage if when they look at your profile it’s weak; is there?
You wouldn’t bowl up to a networking environment looking like you’ve been dragged out of bed or you haven’t washed your hair and you couldn’t have a shave; and then try and engage with people and try and do business. So, for me, it’s a two-part glue: you want to get the profile right first of all. Does that make sense? Okay.
I’m going to give you some things to do with your profile. More and more people are now searching on LinkedIn. LinkedIn is phenomenal; more and more people will find you from surfing.
One of the things I hear that I can’t get my breath with now is: ‘Oh, I only connect with people that I think I know.’ That was a protocol a decade plus ago. If that’s your mindset now, you’re missing massive opportunity. LinkedIn is brilliant at helping you find people from surfing: you can see who else has viewed, you can see who’s endorsed me, who’s recommended me, who else I’m connected to. LinkedIn throws up suggestions.
It’s beautiful. People will find you from surfing, especially when you get your profile more powerful. Makes sense? So, a couple of quick things: yes, you’re professionals, you want to be positioned as to why you’re just professional a business buyer as anyone else out there; so I’d think about your corporate logo banner at the top. Your photo needs to be, as people expect to see you when you walk in the room.
I’ve just had a marketing manager say, ‘Can we put your work on hold while we’re working for you, because our sales manager said he wants to continue doing some stuff he’s already doing?’ It’s a picture of him and someone at his wedding. I don’t know which one is him.
It’s all about creating relationships and building rapport, isn’t it? It’s all about creating relationships with business and with LinkedIn.
Head and shoulder shot on a plain background makes sense; not you sat outside your tent at Glastonbury with your wellies on, like my accountant.
When I said to her, ‘Is that how your clients expect to see you?’ she just fell through the floor. I had a client the other day said, ‘This is obvious; it’s common sense.’ I said, ‘Except it’s not that common.’ It is simple: your name as you want to be called.
I’m only Andrew if I’ve upset my mum. Make it easy for people to know how to refer to you; because, also, think about where you can apply this in the rest of your business and activity. I have my photo on my email header, on my business cards – when I haven’t run out of them – on my website.
If I’m going to go and see someone, I’d message them on LinkedIn and say, ‘Great to speak with you earlier. Looking forward to seeing you. By the way, here’s some information that might give you an idea as to how I’m best placed to buy your business. Look forward to seeing you on Wednesday.’ By the time I walk through the door, there’s a level of rapport, isn’t there?
Why would you walk through the door to a stranger, spend the first half hour trying to create rapport, and then try and get them to sell their business to you. So think about how you can use this.
When I coach my clients, I say, ‘Wear two hats. Think about where else you can apply this philosophy in the rest of your business.’ We’re just talking about marketing and sales; we just happen to be driving the most powerful – I’ve just seen the new Tesla out in the car park: we are driving the fastest, quietest, most technologically advanced marketing tool; that’s what we’re doing. Makes sense? So, your name; think about your name.
For me, the bit under your name is the single most important part of any marketing you do; it’s called your headline.
Your headline needs to stand out and grab attention. Your headline needs to say what you do: helping you sell your business smoothly; helping stressed-out physiotherapists financially retire and move on from their painful business. With some big, thick, black stars – those are just mine. Don’t worry if you see lots of other people; it’s only a few hundred in the 25 or 500 million out there. I use the stars to stand out, and to break out the headline with a couple of search terms, like LinkedIn trainer keynote speaker.
You need to invest some time and think about telling the audience what you do for them; not what you do. MD of ABC Business Buyers Limited doesn’t tell me anything, really.
The moment you change your headline, I’ve had people get more inbound; because it stands out – and you need to keep it simple; because it’s not just the person wanting to sell their business, it’s who else do they know. Have you heard of the six degrees of separation?
We’re no more than six people from anybody in the world who wants to sell you their business. Google that: it says with LinkedIn it’s nearer three degrees – that’s why my business is called 3Degrees Social. Just who do you know? Who do you know? So you need to think about your headline, and I’d work on it: I’d create something and I’d brainstorm some and I’d think about making it powerful.
The next part is your summary. Your summary is like your home page to the world – your landing page. LinkedIn’s changed it; you only get to see the first two lines without clicking down through – so you might want to make the first two lines more engaging.
But I’ve changed mine recently: ‘Hello, and thanks for taking the time to view my profile.’ Here’s where you want to tell people what you do for them.
Here’s where you want to tell people how they benefit. You’ve heard these words this morning. Don’t just tell them what they do: ‘I’ve had 50 years in business.’ ‘I’ve bought and sold this many businesses,’ – people don’t really care. ‘Here’s how I can help you get the price or the deal that you want and move away quickly and achieve the lifestyle that you want.’ Tell people what you do for them.
Tell people who you’re looking to connect with: ‘I’m looking to connect with stressy physiotherapists who really realise that they’d just rather treat people than run a business;’ because, if people are skimming along, if they see your headline and it grabs attention, they’re likely to look at your summary.
They’re possibly likely to contact you then. If they don’t and they flick down to your experience section; your experience section is not your CV – LinkedIn never was a CV. I hate CVs. This is where you can expand on your sales section; you can expand on what you do.
Here’s a tip, if you’ve got a business that’s got multiple products or services, or you’re buying businesses and also investing in property – or whatever else you’re doing – you can split your experience sections.
Same rules: make it spaced out, make things stand out, talk about: ‘Here’s what you can do. Here’s what you can get.’
You can expand on your summary. Your headline: you only have 120 characters, including spaces, so you’ve got to get creative. Summary: you’ve got 2,000.
Experience section: make it relevant. I’ve got five or six experience sections here; it’s all the same business, and I’ve split them. Why have I split them?
Why does it say…? By the way, I’ve franchised my LinkedIn training, coaching. I’ve got three franchisees who have bought in to become LinkedIn trainers and coachers. I was making great revenue: leverage revenue part-time. I’ve got coaching clients in Australia and Germany – it’s highly leveraged.
But why would you want to read about me being a franchisor if all you’re interested in is how you can get more business from LinkedIn.
So I’ve got LinkedIn trainer, I’ve got franchisor, I’ve got software re-seller, I’ve got property investor – so that you can find what you want to read easily. You do not want to read about me as a property investor if all you’re interested in is help with LinkedIn, do you? So make it relevant.
I coached a guy who was 25 years in the RAF, he’d listed every single role he’d done in the RAF. I said, ‘What do you do now?’ He said, ‘I’m a leadership and management trainer.’ I said, ‘Who cares you were packing bullets in RAF Cosford in 1902?
It’s not relevant.
Talk about how you had leadership and how you manage big budgets and whatever’s relevant to today.’ Makes sense? Mine only go back to 1990.
I haven’t listed the warehouse jobs, van driving jobs, the fact I was packing gloves in a warehouse at 17; because you don’t care; you want to care about how much money, sales stuff I can help you with. Makes sense?
You’ve got to shift that mindset to a marketing perspective; that’s how you’re going to get found.
How you’re going to give value is in what you’ve written.
You also want to upload content – I call it value content. There is the nine points to a powerful profile there; I’ve got things like the 11 things you need to know to book in a great keynote speaker: you want to give value to the audience.
That’s a great thing. If you don’t think you’ve got lots of value, think about a tips booklet. If I’ve got the 11 things to consider before booking a keynote speaker and Jonathon reads it and goes, ‘Well, those make sense. I may as well book him, because he’d be an idiot not to deliver on that now, wouldn’t he?’ And I’ve had someone say, ‘Can I book you?’ and I go, ‘How come?’ ‘I’ve read your booklet.’ I say, ‘Well, how many other people are you contacting?’ and he said, ‘None. Why?’ ‘Oh, no reason. Let’s talk.’
So you want to give value to the reader; you want to educate them on things to avoid. The biggest mistakes people make when selling their business: how you can get an easy business, a quick business, sold?
How you can sell your business for the price you want? You can educate your audience on all sorts of things associated with you that build your credibility but gives value to the reader.
Because also, if you skim through my profile and look at those documents – so there’s articles there – Fox News always grabs attention – there’s documents there, there’s documents and video.
Who has testimonials from their clients saying how good they are? I should expect so, Sally and Co. Keep your hands up if you’ve got those testimonials on video. Oh boy, we’re in 2018, guys. Who’s got a YouTube channel? Who’s going to get a YouTube channel tomorrow?
Hey! – but I don’t know your name. Hey, Joe. What did you think of my presentation? What did you get of most value from it? Why would you recommend me? Thanks ever so much: up into YouTube, down into my LinkedIn profile. Who knows that YouTube is the world’s second biggest search engine to Google? Who owns YouTube? Google. Go figure.
I’m now getting found on Google and on YouTube because of what I’m doing on my LinkedIn profile. I dare you. You’re top achieving business buyers because you’ve been trained by Jonathan.
The amount of top professional property investors I’ve coached on how to use video – and I can count on one hand the ones that have gone and done it. I’ve got a great client who’s sat on these stairs going, ‘Here’s the property I bought before, and here’s what I’ve done with it: here’s the leather settee and the big TV, and here’s why my students like to pay top dollar. If you’d like me to show you how to do that, give me a call.’ You can use this in all other places; you can be pushing this out everywhere else; it’s about building value.
I had someone connect with me the other day and I said, ‘How come?’ and they said, ‘Oh, I saw your profile; some great content.’ ‘Thanks.’ ‘I want to keep in touch of whatever else you’re producing.’ So if you scan through that profile: does it look credible? Does it look professional?
We’ll be hearing more from Andy next week. Last week we heard from Kelly, my HR specialist, that I’ve used for many of my own acquisitions. In this episode, Kelly discusses TUPE and why so many business owners find it frightening. Because I always hear people say that they’re very scared of the whole TUPE process. Should people be?
They shouldn’t be scared of it, no; because actually, it can be very helpful; but there are things you need to be aware of with TUPE before you even put in a bid to purchase a company or a contract; because, as I said, you’ve got the employee costs that quite often are not really considered before – or at the point of purchase – and you’ve mentioned, you know: you’ve got the brother-in-law and this person, that person; and they get this and they get that.
You wouldn’t know that without TUPE, and the obligations that the transferrer, the outgoing company, has to provide you that information. It’s very useful from that point and to be able to just furnish yourself with some information. You can plan, also, for what you’re going to do with that organisation once it’s joined your group.
Or, if it’s your first purchase, it helps you plan. There is the downside of staff do come with it – and their costs do come with it – which can… Obviously, if you are buying a company and you do need to shrink it, then it’s a whole other programme that you’ve got to embark on to get it to where you need it to be.
But don’t be scared of it; just be prepared for it, I think is the key for TUPE. It’s getting your facts straight, it’s getting your numbers in line and just being organised with it.
What if a member of staff has a benefit that’s not in their employment contract? So you’ve got copies of everyone’s employment contracts from the data [unclear word 0:20:02.1], and there is a benefit that that person has maybe a car, or maybe the contract has been verbally changed over the years; but it’s not there in writing, so you don’t know about it. What’s your position as the new owner in that case?
It still stands; even verbal, it’s a contract. So, therefore, it’s part of their terms and conditions. How you deal with that, going forward; then you’d have to look at on a case-by-case basis. You might even be going to the people that you’ve just bought from to say, ‘Come on. You didn’t let us know about this.’
Can we protect, in the sale and purchase agreement, then? Can there be a warranty to protect against situations like that occurring?
So that the employment contract supplied in the schedule are current? Or they’re up-to-date, or whatever the wording is?
Yes, because it’s an obligation on them to provide that information. So absolutely, yes.
Let’s look at the upside of this; if they haven’t provided you with the fact that John Smith has been with the company for 12 years… In actual fact, even though the employment contract says he earns £15,000, is now £35,000, and your due diligence hasn’t checked payroll and you didn’t know this. Then you could actually make a claim? You could have a right of offset under the warranties?
So therefore, the next two deferred consideration payments aren’t made, because you’re offsetting the additional costs that you have now incurred; because they didn’t disclose fully to you against the payments that you’ve been making to them for the company?
Potentially, yes. If you get all of that sorted out beforehand, then…
So again, this is de-risking the transaction.
There’s also another point on that. Sometimes the owners – I mean, if you’re purchasing a particular part of a large organisation, and you make them aware that there could potentially be some – or you will be making some redundancies; they will sometimes contribute to that cost as well. I’ve had that within the gas industry, where they actually finance the redundancies.
When we sold – the one that we’re talking about – when we sold it on, we agreed a split of the redundancy costs to sweeten the deal? Yes?
There you go, yes.
So, at what point should someone bring someone like you into the conversation?
As soon as you’re looking at a particular organisation and you’re in talks, I would say get somebody in to start looking at the due diligence on the employee liability side.
I don’t want to tie you down to a specific figure; but what are we talking about here? Are we talking hundreds or thousands? In terms of someone having a look at the employee liability situation?
It depends, it really does…
Yes, exactly. It depends on the size of the organisation that you’re purchasing or the part that you’re purchasing, really; because it does depend on the amount of time that’s going to be spent.
Let’s say it’s a dozen employees – it’s an SME, a dozen employees – need someone to look over the contracts, look at the liability, give an estimate of what it would cost to get rid of people.
[?You’re probably looking at 0:23:46.0] 12 to fifteen hundred pounds to do all of that.
I can tell you that my brief experience with the [unclear word 0:23:56.7]: you pay that very willingly. So how do you negotiate with…? How do you sit down with staff? If someone wanted us to do it all for them; how would you have a conversation with members of staff about the fact that they were about to lose their job?
You initially send a letter out, or a notification, to people to say, ‘Right, okay, this is what’s happening,’ and we’ll invite everybody in for a meeting.
Then you explain what’s potentially going to happen, what the process is and what the timelines are. But it’s easier to do it by letter first of all and then bring everybody in so it’s not a shock.
If they come into a room and it’s a shock: that’s when everybody goes quiet; everybody just walks out of the room and they go away and have their own private conversations. They don’t talk to you and they don’t ask you questions.
If you inform them before they come in, then it’s a bit tougher for the person standing at the front telling them what’s going on; because you’ll get lots of questions. But the outcome is that they feel more informed; and a huge part of TUPE, for example, and redundancies, is information and consultation.
That’s a big obligation on the employer’s side, in that you have to be informing them, and you have to be consulting with them. So, where you can, tell them as much as you can and answer as much as you can.
If there are questions that they’re asking you and you don’t know the answers and you haven’t got the answers yet, then be honest and, ‘We haven’t got to that point yet; we’re telling you as soon as we know something’s happening.
As soon as we know more, we’ll let you know.’ Obviously, if we’ve got a week, it’s slightly different and the conversations go slightly different; but if you’ve got that 90-day period because you’re exiting 20 people, then you’ve plenty of time to be furnishing people.
What if I did 19 people now; how long have I got to wait before I do it?
I’ve got to wait six months?
So, in actual fact, you’re better off doing the whole lot in one go and cutting deep but cutting once?
Yes; from a business prospective, yes.
Let’s say we buy a business, we know we need to shed some staff; what is the most cost-effective way and the fastest way of doing this with zero comeback? Because we offered people a voluntary redundancy, didn’t we? Said, ‘Look, if you’d like to be made redundant – maybe you’re thinking of moving on anyway,’ – and I think some people always are – there’s always someone who’s going for a job interview or looking at the job ads… Is that a good way of doing it?
First of all, you’ve got natural wastage; if people want to leave, let them go and don’t replace – that’s the first. And you will get – as soon as there’s rumblings that somebody else is taking over – people don’t like change, so they will be… Let’s just say, they’re looking and they’re ready to go; so let them go.
There’s always going to be a cost, unless they’ve got less than two years’ service, when they’re not entitled to redundancy payment – but there’s always going to be a cost.
There’s still notice pay that would be associated with that; but then you’ve got the voluntary redundancy where there’s no comeback, because you’re asking people to volunteer. You may enhance their redundancy a little bit. You don’t have to, but you may enhance it to attract them to the idea of leaving.
What are you saying, Kelly? Are you saying that you should encourage people to accept voluntary redundancy, and you might want to make that feel a more attractive option to them?
Because it they’re going to be made redundant anyway, they might as well go voluntarily?
Like an extra, what? Like £100 or something?
You could do whatever you want. Some people will come in and try and negotiate with you; but we would work out: this is the maximum that we would be willing to pay – and then you can negotiate.
Quite often, if you say, ‘We’ll give you an extra two weeks’ money,’ for example… I’m not saying that’s it; but people will bite your arm off for that, because they’re not going to have to pay tax on that. That’s tax free. It’s a little bit more [?interesting 0:27:56.6].
That’s an interesting point, because that’s a good selling point: it’s tax free.
So anything up to £30,000 is tax free, isn’t it, in a redundancy?
Yes. So that’s the redundancy payment. Notice pay is taxable as per their usual salary, but the redundancy is tax free. So that can be quite attractive, because suddenly, that two weeks turns into three and a half, four weeks’ money: more time to [over speaking 0:28:20.0].
And they can walk out the door right now, if they sign this piece of paper saying they accept a voluntary redundancy package?
You have that piece of paper ready to go?
Yes. You get them to apply. You’d say, ‘We’re opening up the door for voluntary redundancy. Please let us know if you would like to be considered,’ – because you don’t have to accept. Because one of your best members of staff may want to go. You’ll be saying, ‘I don’t want them to go.’
But, the thing is, though, if they want to go, then you can’t persuade the people to stay.
There’s ways and means.
Well, yes; but I think that if someone wants to go – even if you say, ‘Look, let’s give you a £5,000 pay rise…’ It’s like the seller of a business, they’ve mentally left the building…
They’ve gone, yes.
…and I don’t think you even want that person hanging around.
Yes, well, you’d make that decision. So, if somebody says, ‘I want to go,’ you’ll say, ‘Yes’ or ‘No’ – but yes, you’re absolutely right. If you say, ‘No;’ what is that doing to that person who actually had his eyes on the prize and was going to go and live in Spain for the rest of…? You’ve just shattered his dreams.
You’ve got [?to play it. ‘We’ll 0:29:22.0] offer you voluntary redundancy; we’re not going to accept it,’ is almost like it has a negative impact to it.
But they do. I’m sure everybody’s heard – particularly in the public sector – is, quite often, people get declined and they’re sitting there because they’ve got to work there for the next ten years until the next round of redundancy comes up.
We’ll be hearing more from Kelly next week.