When we are helping to prepare a business for sale, it’s not as simple as slapping up a “for sale” sign and seeing what interest we might find in the market. Our job is to align the personal goals of the existing owners with the sale of the business, and help them get out of it what they want and/or need. This often means that their business isn’t as saleable as they think it is today – and sometimes there are things happening that are beyond their (and our) control that are affecting their ability to sell. It could be a competitive market, or they could be dealing with a small pool of buyers for the industry, or there could be a variety of other environmental and/or political factors that are impacting their ability to sell. While we can mitigate the impact of these types of factors to an extent, we can’t always directly remove the obstacles.
However, when it comes to saleability, we focus on the things we can control. Similar to preparing your house to sell, you want to show your business in the best possible light. From an HR perspective, this means the less red flags or potential headaches that a buyer sees, the more likely they are to consider purchasing your business. With the HR function often being completed by multiple people in a small business, or falling entirely on the owner’s plate, there are often a lot of internal practices that aren’t compliant with current legislation – and will make life more difficult for a prospective buyer trying to piece the information together themselves.
We continue to see a large number of small businesses that have run their business the same way for years, and not bothered defining and implementing any type of process around the collection and retention of employee records. While it might not seem like that big of a deal to be missing some information here and there, the employer does have an obligation under the Employment Standards Act to keep written records about each person they hire.
The benefit of many of these processes going digital with the ability to submit timesheets and run payroll online is that much of this recordkeeping is done for you, and easily accessible in an archive. However, many small businesses can’t justify the cost of purchasing an online platform and often choose to do manual calculations in books or spreadsheets. While this satisfies the requirement for documentation of the information contained in wage statements, and perhaps vacation pay, there is other information that still needs to be collected and stored in an employee’s file, such as the employee’s name, address, starting date, vacation time, information relating to leaves, etc.
You can check out Ontario’s guide to the Employment Standards Act here and learn more about your obligations as an employer. Not only is it a best practice to have your information kept properly and securely, but the Ministry of Labour can also request the records for inspection at any time. If these two reasons aren’t enough to convince you to look at your own practices, remember that a potential purchaser or internal successor will be interested in how organized and compliant the company is, so make sure your recordkeeping isn’t one of the headaches they have to consider when making a decision about your business.