Why you need succession planning
Are you a baby boomer with your own business and intend to retire within the next 10 years? Then you are not alone but you could also be in a high risk situation.
The vast majority of baby boomers in this profile have no exit strategy out of their business either through a sale or transfer to other family members. In fact a 2006 study by RMIT found at that time the average age of business owners in Australia was 55 and 81 percent intended to retire within 10 years but 75 percent had no exit strategy. Most of these people have their retirement plans tied up in one asset - their business. Therefore it is critical that business owners have a game plan.
Added to this are two other twists. First if you are the baby boomer hoping to sell your business will you be selling into a market already saturated with businesses of similar types? Then even more reason to have a plan that takes into account this very situation. With careful planning and a good exit strategy you can make your business more attractive to a purchaser, giving you the edge in the market place. On the other side of this there could be a real business opportunity. If you are looking to buy or expand your existing business a profitable business with a clean entry and exit point can be a very attractive proposition.
Baby boomer business owners should also be careful about "cruising to the line". That is, pulling back from your business in the last few years before retirement by working shorter hours and taking more time off. If you can do that without losing market share and profitability good luck to you but if it means your growth slows or profit goes down then this could seriously affect what you can sell your business for when you finally decide to retire.
At McGillivrays we can assist you with business reviews, succession planning and exit strategies for your business. For more information on how we can help you call our office number 08 6272 6888.
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