Paddling Without a Destination in Mind
According to the Australian family and private business survey of 2013 a large percentage of family and privately owned business owners are toiling away and working hard without any real sense of what their “end game” is or how they will get there. If we were catching a cab from the airport, would we tell the cab driver to just drive to no particular destination and take whatever route they chose? Highly unlikely! Yet in our businesses we do the equivalent of this all the time. We are not really sure where we are heading or how we are going to get there according to the survey.
The results of this survey revealed that 55% of businesses surveyed did not have a strategic plan, and 48% did not have a business plan. That is, 55% of businesses have no planned end game, no particular end goal that they are working towards, and no strategy to get there. 48% of businesses have no business plan. No plan to maximise the value of their businesses or blue print for the planned operation of those businesses.
For a country like Australia where a large percentage of our family and small to medium enterprises are owned and controlled by baby boomers, this is indeed scary stuff. Over the next 10 to 15 years more and more of these business owners will be hitting retirement age. At some point along that path they are most likely to want to either sell their businesses or transition them to family members or one or more of their staff. Given that many will be relying on part or all of the sale proceeds to fund their retirement it seems logical that they would want to maximise their business value leading into or towards that point.
Without a strategic or business plan how is this going to happen? With no strategic or business plan achieving maximum or optimum business value becomes unlikely. The end result is twofold; many of the current crop of baby boomer business owners will either retire with a lower than hoped for standard of living in retirement or in some cases they won’t be able to afford to retire. The second outcome of this is that a lot of generation Y future business owners will purchase those businesses at discounted values.
The good news out of all this is that it is not yet too late. If you are a baby boomer business owner or professional practice owner act now to get your house in order. Engage a good professional to help you organise your strategic and business plans and start working towards maximising or optimising your business value. To get this right you need to start 3 to 5 years out from your planned exit or transition.