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Business succession / exit planning
In Australia, some 97% of all businesses are classified as family and privately owned. A significant proportion of these meet the definition of small business – that is, employing less than 20 people.
Small business employs approximately
40% of the Australian workforce. Indications are that up to 80% of all
small business owners wish to retire in the next 10 years (source RMIT
University 2006). This has significant implications for a number of groups
including owners, employees and the government.
Succession planning is the process a business undertakes to ensure the
business continues into the future, regardless of ownership or management.
It is the planning process undertaken to transition to a new owner or
new manager. It is the process used to maximise the value of the business
upon transition.
Developing a well structured succession plan offers many benefits to you
as a business owner:
...
> Clarifies
authority and organisational structure
... > Improves
the performance and sustainability of the business
... > Maximises
the value of the business
... > Assists
greatly in staff attraction and retention of key employees
... > Identifies
risks associated with an owners or key employees departure from
. ....
the business
... > Creates
less reliance on the owner for day to day activities
... > Identifies
potential family issues and value alignment
A well planned succession
process implemented sooner rather than later, is the blueprint
for ensuring the continuity and success of a business. Exiting a business
is a question of ‘when’ not ‘if’. All owners will
exit at some stage so it is extremely important to take control
of the inevitable. Succession planning should be considered regardless
of how you are going to exit the business. Methods of exiting include:
... > Gift
or sell to family member
... > General
sale
... > Trade
sale
... > Management
buy-out or buy-in
... > Public
listing
... > Private
equity
The importance of succession
/ exit planning
> Succession planning
will maximise the value of your business. Most businesses are valued and
bought on their ability to provide dependable earnings into the future.
Optimising profitability during the planning period will positively impact
on the value of
your business.
> The succession planning process will unlock the true value of your business asproductivity and efficiency gains across the business will be identified.
>
The survey data above indicates the likelihood of a significant number
of businesses looking to transition in the next 10 years. Those that are
well planned will find transition
easier and quicker than those who are not.
>
Within a family business, passing ownership or control to a family member
requires
careful consideration to ensure continuity. Family members often have
different values
and views in terms of business vision, expectations and attitude to the
business and stakeholders.
Good succession planning will greatly assist the chances of you achieving your personal, business and financial goals.
The Raffino succession planning process
Raffino Business Solutions have developed and can facilitate a detailed
process to ensure the true value of your business is unlocked and then
realised at the point of transition.
The documentation and management of the process is a key factor in the
success of any succession planning process.
The process focuses on both
your personal requirements and those of the business.
> Personal
.......>
Evaluate the current personal position
.......>
Identify the ideal personal position on/after succession
.......>
Implement initiatives to achieve the ideal position on/after succession
Some considerations within this part of the process include estate planning, financial planning, aspirations and preferred activities for the owner.
>
The business
.......>
Evaluate the current business position through a business diagnostic
.......>
Identify the ideal business situation at key points along the pathway
to succession
.......>
Implement initiatives to achieve the ideal position at these key points
Some considerations in this
part of the process are:
...
> The timing
of succession / sale
...
> The overall
business model
...
> The legal
structure
...
> Organisational
structure, roles & responsibilities
...
> Removing
reliance on the owner
...
> Systemising
the business
...
> Driving
financial performance
...
> Initiating
a governance process
...
> Identifying
and developing key employees & managers
...
> Legal
issues such as agreements, leases and intellectual property
...
> Driving
productivity in each business area
...
> Relationships
between family members
...
> Identifying untapped business
...
> Identifying
and courting potential buyers
Raffino Business Solutions will ensure your business value is unlocked and maximised through a well defined and documented succession planning process.
