You’ve grown your business gradually and now your mind turns to collecting your reward from your investment of capital, know-how, and years of effort. Achieving the most money for your business requires the same diligence it took to grow it. So, how can you ensure you receive a return for your efforts?
Effective Succession Planning is the key to protecting, growing and realising the maximum value for your business. It is a strategic process that allows you to smoothly transition the ownership and/or management of your business.
Research shows that business value can be impacted by a number of issues, including:
- Complacency of business owners in addressing succession
- Business owners often being unaware of all their succession options
- Generation Y lacking the aspiration to be a business owner
- Increased house prices restricting the funding options for successors
Why is Succession Planning a key-issue now?
Do you remember what you paid for petrol when you started in business? Maybe 39 cents a litre? Times change, markets change and so does the business environment. Not long ago, business entry costs and competitive forces were lower and business growth could be funded by borrowing against increasing house prices. Business success demands focus by you on the operation, but ultimately, issues of succession and retirement will creep up. By then, getting the price you need could be elusive.
The next generation of business owners, Generation Y, face a completely different business environment. Start-up and acquisition costs are higher, regulatory barriers are higher, and competition has increased. Business funding opportunities are also more limited in comparison.
You’re a business owner and you understand the driving forces behind competition, supply and demand. So when:
- More businesses are for sale – lower prices result
- With fewer qualified buyers – it becomes a Buyer’s market
- In a Buyer’s market – they can be selective and value driven
Thus, it is important for you to start planning your succession now.