Creating a sense of ownership

by Adrian Kinnersley, managing director of Twenty Recruitment

One of the defining features of our business model here at Twenty Recruitment is our approach to ownership. 

We know from our previous experience the difference between simply working for a company and having an equity stake in the company. We wanted to recreate that feeling for the directors running each segment of our business.

We wanted to offer directors a different proposition- almost like finishing school for entrepreneurs. After reviewing several options, we developed an Enterprise Management Incentive (EMI) option scheme, giving each group of employees a share class and options within it. 

There is then a direct correlation between the profit that they bring in and the percentage of the share class that they own.

In practice, this means that directors of each of the business units have their own profit and loss account. Directors, and their respective teams, receive the standard group commission on each placement. The directors get an annual bonus based on the profit generated over the year – and receive additional equity relating to the profits left after the bonus.

This sort of share scheme enables directors to really thrive in their own right and to make a lot of money, which is why it works for us at Twenty – everyone here is entrepreneurial, capable and committed to building a successful business. 

What’s more, everyone at Twenty becomes a shareholder after one year – no matter what their position. Giving your people some skin in the game is a sure-fire way of keeping them interested – and busy!

Starting a new business?

First task – plan an exit strategy!

Adrian Kinnersley, managing director of Twenty Recruitment, discusses how best to plan an exit.

It might seem strange to start planning a business exit strategy as soon as you launch a new company, but at Twenty that’s exactly what we did.

It’s hard work building a successful, valuable business and the ultimate reward is to sell it and enjoy a high return on your investment. Furthermore, people who build their business with the aim of some form of transaction to change the ownership  have a fixed goal right from the start and that is to have the right people and processes to enable the company to expand into a highly profitable entity.

This approach takes into account the fact that the founders may not be the right people to expand a business further once it has reached a certain size. In every company, there comes a time when a new perspective is required if the business is to carry on moving forward.

But how do you go about building a business that somebody else is going to want to buy? There’s a lot of competition out there and your business will need to be something special if you want to walk away with a decent ROI.

We hear a lot these days about the benefits of strong brand management and this is vitally important if you plan to sell off your company. Get out there and get noticed! The web and in particular our love for social media, has opened the door for industry experts to get heard quickly and easily by a worldwide audience.

One of the most valuable assets a company possesses is its workforce. Deciding on the culture and values of the business right at the start ensures that everyone understands the support they will receive to develop their careers. It’s also worth considering a share option schemes as incentives to encourage employees to help build the company into a successful entity.

Back office staff are just as important as those on the frontline. Companies will not prosper unless they have strong financial management. A prospective buyer will want to look at budgets, cash flow, forecasts and other financial documentation.

We’ve more on planning an exit here.