Exiting your business – 52% of owners have no succession plan!
Business surveys show that 33% of independent business owners plan to exit their business within the next five years and 81% within the next ten years. The survey also found that only 10% of owners have a formal written succession plan; 38% have an informal unwritten plan; and the remaining 52% do not have any succession plan at all.
As Australia has nearly two million small businesses the issues of business succession and continuity are common. With the average small business owner now aged 55 years old the ‘baby boomer’ demographic wave is now reaching the stage where serious consideration needs to be given to exit.
A Business Exit Planning process involves:
- The business owner defining their objectives with respect to an eventual exit.
- Design of a comprehensive strategy and road map that takes into account all personal, business, financial, legal, and taxation aspects of achieving those objectives. Objectives may include maximising (or setting a goal for) proceeds, minimising risk, closing a transaction quickly, or selecting an investor that will ensure that the business prospers.
The business exit can involve:
- Sale of the business.
- Initial Public Offering.
- Management Buyout.
- Passing on the firm to a relative.
- Business closure.
- Financial partners to help ensure succession and survival of the business.
A formal written succession plan helps ensure that the most efficient transfer of the business occurs that meets the business owner’s objectives – whatever they are.