Succession Planning for Businesses
It takes guts to start a business. It also takes a strategic mindset to succeed. Business owners are no strangers to weighing up risk and navigating uncertainty, but the current climate has dialed everything up. Many business owners face the uncomfortable position of having to remap carefully thought-out succession plans and exit strategies and to consider selling their business before they are ready and, possibly, for less than it’s worth.
Transition May be a Better Option
At Hysons, Chartered Accountants, we work with business owners to ensure they get the best possible return when selling their business. Our advice is to start by thinking about what options you have first.
There are five different ways to sell:
- Close the business down and sell the assets
- Sell to a family member
- Sell to an employee
- Sell straight to an outside party
- Gradual buy-out.
When considering a gradual buy-out program, the key is finding a manager to take the reins early on. The process of a gradual buy-out involves:
- Figuring out what kind of individual would be right to run the business; finding that person, and developing them.
- Creating a plan where the new manager buys in gradually over 3 to 6 years. The objective is to get the owner out of the business physically as quickly as possible by transferring relationships and processes to the incoming person, so the owner becomes more of an investor rather than a manager.
Preparing for Sale – What’s Important
- Get your house in order – Ensure you have systems and processes in place so the business is not reliant on you, but can run as a standalone entity.
- Maximise your profit – Make sure that you are not taking decisions to minimise your tax liability – because what you are trying to do is create a profitable business.
Don’t Put Off Your Succession Plan – Even if You are Not Ready to Sell
It’s a good idea to think about succession planning long before you need to sell so that you maximise the value of your business and achieve a better outcome. It’s also worth remembering that retirement doesn’t have to mean doing nothing. If your business can run as an asset without your involvement, you don’t have to sell it completely, so not selling down 100% of the business is also a viable option.
Talk to Us Today About Succession Planning
Hysons, Chartered Accountants Andover understand that after putting your heart and soul into running a successful company, the thought of selling it and appointing a new leader can be daunting. We’ve worked closely with many business owners to to make this process easier, developing a strong succession plan well in advance that they can rely on. If you don’t already have a succession plan in place for your business, talk to us today about the options available to you.