Barriers To Exiting a Business
In the recently published BRW ANZ Private Business Research conducted in late 2008 an amazing lack of realism from many small business owners is highlighted. Over 68 % of business owners saw no barriers to exit when surveyed. Despite a trade sale being the most likely form of exit (38 % of business owners), few respondents perceived any difficulty in finding a buyer !!!
Of the minority who did see some barriers the largest barrier identified was the potential inability to find a suitable successor to run the busienss. This was particularly the case for smaller businesses where the management structure was centred around the founder or owner and no immediate successor was obvious.
The survey concluded ” with just over half of private business owners planning to reduce their involvement in the day-to-day running of the business within the next five years it is important business owners are aware that this could have a significant impact on the private business sector (including increased ownership changes, corporate restructuring, business valuations). With so many owners considering the options and given current economic conditions, it would seem even more important for private business to carefully assess their succession planning with independent expert advice. The survey indicates that more than two thirds don’t have a formal succession plan in place and yet a similar number don’t anticipate barriers to exiting the business, while around a third haven’t had any formal valuation on the business. Planning should also include how to facilitate transition from managing a business to managing wealth considering both business and personal goals.
Prepared business owners who access independent, expert advice should be on the front foot, compared to their peers who have not planned ahead