Last week, we covered the three best methods to install a General Manager into a business post-acquisition.
But one thing I didn’t cover in that issue was:
What’s the best way to compensate a GM?
Traditionally, you can do this in three ways.
Three ways to compensate your General Manager
- A base salary
- A bonus structure based on performance
- Some form of equity
In most cases I recommend implementing number 1 and 2 together.
Adding number 3 on top is optional. This is reserved for when you think that this person is literally key to your business to the point where it cannot run without them.
If so, you can give them:
- Traditional equity (a percentage piece of ownership in the company)
- Or, phantom equity
The most important thing is to make sure:
- The GM is treated like an owner
- The GM feels like an owner
- The GM feels that they have the support they need, and that this is a business where they can grow
Because when you have a high-performing employee like this running your business for you, other business owners are going to see that. They’ll reach out to your GM and try to bribe them to come work for them instead.
So make sure your GM feels appreciated and well-compensated!
An example of what a well-compensated GM can do for you
This comes from my Acquisition Ace students Ben & Andrea.
(I wrote about this deal recently, you can check it out here.)
Ben & Andrea bought an upscale nail salon.
They specifically chose this salon because it already had management in place who could run the day-to-day for them.
This freed up a ton of time and energy to focus on scaling the business immediately after closing the deal.
Since then, Ben & Andrea have been focusing purely on:
- Building up the business’s marketing
- Building up the backend operations
- Potentially expanding to a second location.
This deal was an excellent example of the power of having the right GM in your corner.
It enables you to work on your business, instead of being trapped in it!
Want me to send you deals?
I come across a lot of valuable deals and investment opportunities in my work with Acquisition Ace.
Any time I find one that I think is worth sharing, I send out a broadcast in case my subscribers (you) want to jump on it.
To opt in to receive those emails, just fill out the 2-minute survey below:
👉 I want to buy (or passively invest into) a small business
Or, if you’re looking to sell your business, tell me about it in the survey below:
👉 I want to sell a small business (and I want help finding buyers)
Onward,
— Ben Kelly
