The importance of succession planning for your Warrnambool business
If you run a small business in Warrnambool, have you considered succession planning as part of your overall business plan? Do you know why it’s important and how you could be impacted if you don’t have an exit strategy when it’s time for you to retire?
Many business owners know that succession planning is important, but always put it on the list of things that they will “get to one day”. Often this is because the issues associated with succession planning can seem too difficult or overwhelming for business owners to deal with on their own.
At Sinclair Wilson, we have been dealing with these issues for over 65 years and understand the complexities associated with transitioning businesses to the next generation or to a new owner.
Where the business is being transitioned to family members, communication plays a vital role in the process to ensure that all stakeholders are aware of how and when the transition of the business will occur. Succession planning can be a fruitless exercise when one or more of the parties involved are dissatisfied with the proposed outcome either from a timing, control or financial perspective.
We have encountered a number of instances where parents simply expected that their family members would want to take over the family business, but when it came time to do so the next generation declined the opportunity. In these cases, significant heartache would have been avoided by discussing succession planning earlier in the business life cycle.
When the succession plan involves the disposal of the business to an external party, it is important to work on the business in the period leading up to sale to ensure the business is as attractive as possible to potential purchasers in the market. This may include working on ways to maximise business profits, systematise key processes or retain key personnel.
By starting to design the business around what will be marketable to a wider range of potential purchasers from both Warrnambool and further afield, business owners maximise the likelihood of a successful sale outcome.
Business structuring and taxation consequences will play a significant role in both family and external succession planning, as the choices made in the lead up to succession can have a significant influence on the financial outcomes for business owners. It is important that business owners start thinking about these issues a number of years prior to disposing of the business.
By undertaking appropriate structuring and tax planning activities prior to the decision to dispose of the business, owners can maximise the level of financial resources that will be available to them in retirement.
At Sinclair Wilson, we can assist with all of these matters in order to maximise the effectiveness of your succession plan. For further assistance contact one of our offices in Warrnambool or another rural center in South-West Victoria or South-East South Australia.