If even a smidgen of the thought and planning that’s invested in getting into a business went into getting out of it, life would be a whole lot easier for many business people.
For some, exiting their venture is by design, for others, it’s by necessity – whatever the background, I’ve watched all manner of businesses come and go. From my experience, those who are guided by a considered exit strategy reap the rewards.
I know: in amongst hectic day-to-day operations, succession planning doesn’t, on the face of it, seem like a key priority – especially when you don’t plan moving on any time soon.
But what many business people don’t discover – often until too late in the piece – are the many options open to them and, significantly, the strategies available to make their departure smoother … and more lucrative.
Succession planning basics
Whether you plan to eventually sell your business as a going concern or transfer it to family, if you plan to move on in five or 50 years, there are key considerations for every business owner.
Seek advice: Your legal adviser should be your first port of call, although it’s likely you’ll need input from your accountant, financial planner, and possibly other specialists down the track. Your lawyer will help you not only scope out the nature of your business, but also help you safeguard your assets for today and prime them for sale or transfer tomorrow.
Long-term goals and strategy: After identifying exactly where you’re going, you need to select the right steps to ensure you reach your destination. I’ve seen it many times before – business owners have in their mind what will happen to their company when they’re ready to leave, yet, unwittingly, they’re running their operation quite contrary to that outcome.
Key tools: Smart businesses, in conjunction with their advisers, do their due diligence early and discover the best legal and financial tools to realise their exit strategies. Many of these tools are very much limited time offers – in other words, they must be identified and organised well, well in advance of departing the business. These can include anything from insurances and tax to trusts.
Every business is different and no two owners’ situations and aspirations are exactly the same; thus, every exit strategy will be unique. Whatever the background, though, there are three critical elements: time, knowledge and planning put the success in succession planning.