The 4 Big Succession Issues Your Business Should Address

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The 4 Big Succession Issues

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The 4 Big Succession Issues

By , March 7, 2019
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The succession process can be difficult to implement, particularly when business owners hold off until the last minute to pass on the reigns. Based on our research, there are 4 major issues concerning succession that must be considered in order to maximise value and successfully transition away from the business.

1. The ability to generate adequate financial returns

One of the strongest arguments you can place in front of a buyer that you have a business worth purchasing, or investing in if you choose to implement an Employee Share Ownership Plan, is a history of predictable, secure and sizeable returns to justify the outlay.

2. The financial capacity to retire

When the Aged Pension was introduced, life expectancy was approximately 64. Now, being closer to 80, the government has been at pains in the last 30 years to shift that burden back to the individual. If you are relying on your business to fund your retirement, the smartest thing you can do is start preparing as early as possible for this. Begin with the end in mind.

3. Trust in the abilities of the potential successor

The world changes, a new way isn’t necessarily a bad thing. Children need to be able to make mistakes to grow into happy, functional adults. It’s no different with successors – they need the latitude to make mistakes or they won’t grow into seasoned business owners, like you.

4. Potential successor’s interest in the business

Once upon a time, the routine thing was for the eldest child to take over a business. The stats have changed, only about 14% of businesses go to the second generation, and 4% to the third. It is perfectly fine to look further than your own family to find that successor who really has a desire to take the reigns of your business.

Regardless of whether your succession plan involves transferring ownership to a family member or key employee, or finding the right buyer, addressing the 4 big issues of succession will undoubtedly make this transition a successful and positive experience.

Leave on a high note.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.