Selling your business may seem very far off, but investing in succession planning now will help you make strategic decisions about who will lead your business into the future.
At some stage, you may decide to leave your business, either to sell, to retire or to launch something else. For many, these scenarios may feel like a long way off, but exiting your business is something that ideally needs to be planned for as far in advance as you can.
What is business succession planning?
Just like the name suggests, succession planning will help you successfully transfer your business to your successor when the time comes for you to sell, leave or retire.
A strategic succession plan will not only help you transition out of the business more easily, but will also help your successor prepare for the present and future work responsibilities.
You may want to sell the whole of your business, or just part of it. There could well be some unforeseen or unfortunate circumstance that forces you to sell. Whatever the situation, it’s always best to be prepared. Before the actual sale of your business, you will have to put a value on the business, find a suitable buyer, and of course, have the right business structure to make the sale transaction easier and less expensive.
How to develop a succession plan
There are two key components to business succession planning:
- Personal: Having the right investment structure yourself and appropriate estate planning in the event your business needs to be sold unexpectedly
- Business: Having the right structure, agreements and arrangements with business partners so that exits are smooth and disputes can be minimised. This also includes agreements that govern situations where a business partner is incapacitated or dies
As circumstances change, it’s important to regularly check this exit strategy and associated structures to ensure they are still appropriate. The other critical thing to do during the life of a business is to understand its value and focus on areas that you know will increase its value over time. After all, a smooth exit is not much use if the value is very low.
In our experience not enough businesses have a genuine, independent view of their business worth and this comes back to bite when it’s time to sell.
How we can help
We can help by assessing the value of your business and perhaps by introducing potential purchasers. Often overlooked are the tax and accounting calculations involved in this critical time. They can sometimes be extremely complex and they usually require expert knowledge.
So way before you even start to think about making any moves to sell your business, get in touch with our team. Even more importantly, make sure you ask us to help you set your business up correctly in the first place. This can make your life so much easier when it comes time to sell your business down the track.