As a result of the downturn 10 years ago, a lot of small business owners delayed exiting their business until an upturn occurred. Ironically, when this upturn did finally happen and has since continued from 2013, many of the same small business owners decided to ‘hang in there’ and enjoy this upswing.
This procrastination has resulted in the prolonged delay of moving into the final stages of selling their businesses due to factors such as needing to rebuild value after adverse trading conditions, having to put investment and growth opportunities on hold or (more recently) having to work harder to cope with increased activity and lack of personnel to cope with this upswing.
All the while an increased risk of continued business ownership as they physically get older. The ultimate irony is this has happened en-masse and now a burgeoning bubble arising from ‘baby boomer’ business owners needing to exit.
Just as ironic, the numbers of people available to purchase the business have not increased – why would it when the numbers of available skilled personnel at record lows?
So regardless of good or bad economic times (currently excellent economic time / terrible employment market to cope with this growth), it is highly beneficial to ensure that:
A robust succession plan is in place as soon as possible
Personal / family goals for life after business is clarified and well prepared for
Business Value and the Value Gap
Establishing the real value of a business continues to present a major challenge for many business owners. It is vitally important to be under no illusions about getting this as right as possible.
Failure to do so often results in major disappointment and loss when it comes to eventually realizing the value of a business. The evidence is clear: those who use the qualified experience of business advisers achieve much better outcomes than those who don’t.
These advisers should make a big difference but need to be coordinated at the right time for the right need for the business owner – YBT Coaching and Consulting (YBTCC) ensures this happens with a plan and accountability.
It is imperative you know what value you require from the sale of the business to achieve your personal goals post sale – as the business value is usually driven from the profit history, it is crucial your current and future profitability is definable and transferable.
YBTCC assists in this process working with your existing professional advisers to get you the best outcome.
A good option for some owners is to sell down
Some businesses are difficult to sell outright but still have immense value to be realized. Should you not choose or be able to sell outright, there are eight reasons to commence a progressive sell-down strategy effectively.
Defining the business value – you now know its market value
Continue to receive profits and capital growth
Receive cash from the sale to reinvest, or to retire debt
Increase the range and number of people who could afford to buy your business
Prepare the new owner for a total sale on a progressive basis
The business gets a new lease of life, so may grow faster
Emotional rewards from seeing the business continue to thrive
Management pressure shared (possibly for the first time)
I've worked for over 18 years getting clients the outcomes they strive for, but never in my experience has the need for business owners to plan for their exit been more important than now.
Succession Planning should be scheduled over a 36-month program, but if your need to exit is more pressing, then momentum planning needs to start NOW!
So now what? Here’s your plan of action:
Download here our Succession Planning Questionnaire
Complete it and send to us for your FREE no-obligation 2-hour Discovery Consultation
Upon receipt, we will confirm a date and time that suits – after hours is fine with us
Any other questions? You can always phone 03 479 3890, or email firstname.lastname@example.org for more information!