The Succession Stage
No matter how invested you are in your business; succession is inevitable at some stage. Either due to advancing age, health, or other circumstances, we all face a decision about passing our business on to a successor somewhere down the line, or else developing a different kind of exit strategy when the time comes.
Most business owners will have three distinct options of an exit strategy when they’ve decided they can no longer be at the helm of the business. Choosing how you wish your business to go on once you’ve left – or whether you want to for it to go on at all – is an important decision. It will affect both the people around you as well as your legacy.
Exit Options in the Succession Stage
1. Succession
If you’re keen to see your business continue to flourish even after you’re no longer fronting it, choosing a successor could be the best way to proceed. In many cases, this might be a successor within the family: a son or daughter. But if you don’t have children or your children aren’t interested in taking over the business, you can also choose a successor from outside the family: even a loyal employee. Choose someone who’s willing to put the effort in to learn, who’s as passionate about the business as you are, and who you know will be keen to stick with the business for a long time.
2. Selling Up
Another option at this stage of your business’s life cycle is to sell up. You could sell to a competitor or merge with another company, or – to start – even think about going public and selling off shares in the company. This is a great way to free up money to take you through your retirement, but it’s not always as straightforward as it might sound. It can be tricky to know how to value your own business confidently and selling your business in a tax-efficient way can make a huge difference to the money you’ll take home after the sale. It’s important to consult professionals before selling your business to ensure your sale is fair, legal, and unambiguous.
3. Closing your Business
The final option for the succession phase is to wind your business down. Understandably, many business owners don’t want to do this after spending many years putting effort and love into growing the company from a burgeoning start-up to a successful firm. This option doesn’t offer much value to business owners, and it’s not a simple process either. Still, it’s a common option, particularly in cases where succession planning has been left too late, and there are few other options on the table to consider.
Expert Financial Advice
At Accounting Professionals, we’re experienced in working with clients at all stages of the business life cycle. If your business has reached maturity and you require an exit strategy that looks after the interests of your business and yourself, contact us. We will empower and support you to make the choices that are right for your business.
Get in touch with us today by completing the contact form here or call us: (02) 4297 0066.
