How ready are you to exit your business?
Research shows that 70% of people are NOT, and when you read the article below you will understand why that will have a significant impact in New Zealand over the next few years.
New Zealand's population, like that of most developed countries, is ageing which means many business owners are also aging.
We currently have approximately 180,000 business owners over the age of 50 which accounts to approximately 40% of the total business numbers in New Zealand.
But here are the statistics you should be paying attention to:
- 40% of these people intend to leave the business in the next 5 years
- 60% of them plan to use their business as their primary source of retirement income
Which means there are going to be many businesses on the market at the same time or many people needing quality managers internally/externally.
- For those of you who are planning on selling your business to retire then getting the business set up for sale correctly is mission critical particularly if you want to stand out amongst the competition and get a better price. It is of paramount importance that the sale price allows you to retire comfortably without compromise your quality of life.
- You may be planning to exit your business and retain residual income going forward from your shareholding. Once again this also needs proper planning and execution to provide stability and consistency in income.
“Succession Planning” is developing internal people with the potential to fill key business leadership positions in the company.
Research shows 70 percent of businesses think succession and exit strategy planning is important but only 12 per cent have a documented plan.
Unsurprisingly, the main motivating factor for the creation of a plan is age.
This gives you an advantage if you put the time and effort in to setting up your business correctly now.
To sell a business in a competitive market requires sufficient time to create the correct structure. Leaving it to the last minute is a recipe for disaster.
What should every business owner planning to sell or retire in the next 5 years be doing?
When considering the sale of your business, you must consider the two stages:
Stage One: Understanding when to sell or exit - the "getting ready" process
You need to explore issues such as whether you have the right information together for the potential buyer. Does your business look like a low risk investment?
Do you understand the key criteria in selling your business so you can structure your business in the best light? Is it likely that if you waited you could improve the appeal for your business and therefore sell it for more money?
If you plan on having the business managed there are other considerations. How much involvement will you still have even if on a limited basis? Is there a leadership plan in place currently in your business? Will you need at some stage to bring in outside management? Is your business financially strong enough to pay for a manager and provide you an income?
Stage Two: Understanding how to sell or exit
This is the price, strategy and processes that you will use to advertise and sell your business. Don’t take shortcuts because there is too much at stake. Complete the checklists in Stage One, Stage Two is the execution of a well thought out plan that result in the maximum sale price.
There are many different avenues business owners can use to find out more about exit strategy and how to prepare your business for sale or succession. One is to seek out professional help by using either a business advisor specialising in exit or a business broker. If you feel like you can do this on your own, there are some great books in the market as well or you can attend seminars and presentations run by experts in the area.
Business Success Partners also offer a free Business Analysis which includes a comprehensive report to begin the exit planning process. BSP also has a comprehensive Exit and Succession program available for those Business owners that are ready to begin planning now.
To get your Free consultation with our BSP advisors who specialise in this field please fill in the form below.