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I am a fan of your posts and was wondering if I could ask you a question/advice. I am the general manager of a busy bar and restaurant and I´ve been promised time and again shares in the company. One of the owners is planning on selling his shares to the other partners which will open up the door for me to purchase shares. I´d like to purchase 5% and ask that they give me an additional 5% (the amount promised to me). Is this sort of thing common or have you heard of any similar cases.
Taking Stock in the GM
Dear Taking Stock;
It isn´t uncommon for employees, especially those in management, to be offered stock in a restaurant operation. And, if the company has a concrete foundation, is profitable, prosperous and proficient in looking towards future growth the offer could be substantially worth while in the long term. Frequently owners take this tack in lieu of paying higher wages, offer stock as performance bonuses, or just realize that making employees partners is a smart business decision. The questions that need to be answered are what is the company worth, what is the stock worth and can your performance increase the value of both?
From reviewing your website it appears the operation that you are running is prosperous and well founded. It appears to be large enough to do accommodate a very profitable business model and from the short film I watched you seem to be one who enjoys promoting the restaurant, the brands it offers, and in return adds a spark of creative enjoyment to the establishment.
I wouldn´t hesitate at all to discuss the offer to give you 5 % of the company. When the owners made that offer they must have realized your qualifications and ability. I wouldn´t however tell them that you are interested in buying any stock until they give you what the said they would give you originally.
Since I do not know how long you have worked in your current position, or how long you have been at the company in total it is hard to judge the value that you have to them and the stock would have to you.
As the GM you should know the value of the company and you need to use that to define the value of the stock. Do the owner´s currently split the profits according to ownership? Is there a dividend being paid? Is there a stock option plan in place so you can purchase more shares as time progresses?
Finally, make sure you get your boss- your soon to be partner- to ell you how much the stock he has promised you is worth- and have him show you the formula he used to arrive at that value.
There are two ways to sell stock- on mystery or history. If you are selling shares in a company before it opens you have the ability to use projections, potential growth plans, and possible AAA location to set the value. However, once you open the doors, the performance of the operation and the profits of the company are the major contributing factors for deciding the value of the stock and company. And, since you are at the controls of the day to day operation, you have a good idea of what the stock and company are worth.
It appears you are on the road to mega success. From the looks of the website you have done a great job, along with the owners, of creating a popular venue and turning it into a profitable venture.
Make sure you take the owner´s up on their offer- take the stock, find out what they think it is worth and then pursue the purchase of another 5% of the available stock. Anytime you van hold stock in the company you work for it is great for the employee but also offers unbelievable rewards for the owner´s of the company.