Recently, small business owners and people who start a business were identified in both the Rasmussen Reports and the Harris Poll with the highest favorability ratings. These two reports confirm what I have observed for decades. Entrepreneurs are good people who work very hard, create opportunities and help others succeed.
Just last week I listened to a lifelong entrepreneur explain to her Attorney why she was allocating a substantial portion of her business sales price to be paid to her employees. Several of those employees no longer work for her company. In fact, they left the company’s employ many years ago. So, why would an entrepreneur divert several million dollars from the sale of their business to others, when a written contract does not require it?
This entrepreneur’s advisors wanted to understand the answer to this question as well.
The Attorney asked her several ways “do you have an agreement with these former employees that says you must pay them something?” And she emphatically answered “No, an agreement was never drafted or even discussed.” “So, why are you doing this?” asked the Attorney. “Because it is the right thing to do. I never would have made it without them and I know it. I needed them and they were there for me and the company when I needed them most.”
The Attorney and other advisors continued asking questions until they concluded that indeed this client wanted to pay former employees part of the sales proceeds from the sale of her business because she made an implied promise. Not a written or even an oral promise. It was an implied promise and that was good enough for this woman entrepreneur.
While no one was looking, this woman entrepreneur was doing the right thing! It doesn’t get much better than that. Does it?
Find Holly Magister on Google+
Holly also founded ExitPromise.com and to date has answered more than 2,000 questions asked by business owners about starting, growing and selling a business.
Latest posts by Holly Magister, CPA, CFP
- How to Pay Yourself as a Business Owner - November 6, 2019
- How to Overcome Customer Concentration Objection When Selling a Business - May 22, 2019
- Understanding the Business Buyer Types When Selling Your Business - April 12, 2019