An SME owner’s departure from the business is inevitable, so plan your exit strategy and succession in advance, if you want to leave under the best possible conditions. Bill Hovey, CEO of the Linchpin Group Australia, shares his extensive knowledge and expertise to help you prepare an exit strategy.
Regardless of the size of your business or the industry you operate in, you will ultimately leave the business. An exit strategy gives you some control over how the future unfolds for both you and the business.
As a business owner you probably have expectations of what your lifestyle will be like after you leave. However, if you intend to fund your lifestyle from the sale of your business, and you don’t have a solid succession plan in place now, when it comes to departure time you may be disappointed with the opportunities and financial options available to you.
The scenario could be even worse if you are a business owner without a sound succession plan and you intend to retire in the near future and expect to sell 100 percent of your business. The expectations you have for your proposed retirement and lifestyle could be seriously hampered.
The earlier you develop your business succession strategy the better. It is never too early, but it can definitely be too late. It is simply sound business sense to make time in relation to your future business exit, to examine where you are going and how you are going to get there. Don’t be tempted to delay planning if you can’t see an immediate reward, the key is to have time on your side. Leaving your planning too long can jeopardise all that you have built and hoped for. Effective internal succession planning is ongoing and the earlier you start planning, the more viable you can make the business.
With no succession plan in place there is a strong likelihood that you are exposing the business to a catastrophe. By putting succession planning in the ‘too-hard basket’, or only planning to act when retirement is on the horizon, you could experience monetary losses, and even loss of the business itself through any number of factors.
These can include degradation of the brand, failure to keep pace with the competition, loss of customers, loss of sales, staff attrition and loss of key talent, a fracturing of stakeholder relationships and goodwill, and a gradual decline in the value of the business.
Your business is no different to a share portfolio. If you manage it properly its value can grow over time. Your business succession strategy is an important element of your management process and you need to develop it to balance and protect all aspects of the business.