You’ve grown your business gradually and now your minds turn to collecting your reward from your investment capital, know-how, and years of effort. Achieving the most for your business requires the same diligence it took grow it. This is where having a business succession plan becomes vital.
So how can you ensure you receive a return for your efforts?
Developing a effective plan for business succession is the key 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 for 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 aspirations to be a business owner
- Increased house prices restricting the funding options for successors
Why is business succession a key issue now?
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 success 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 do you need to start developing a plan for business succession?
- More business 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. Talk to the business advisory team at MGI about our succession planning services and let us help you start the process. We can help you benchmark your business against others in the market, strategic planning planning, wealth management and business valuations.
You might also be interested in our previous blog about business exit strategy.