Q: I own a family business and I am trying to plan for what happens when I retire in a few years' time. What should I do?
A: Laurie Conder from Enterprise North Shore replies:
Many people who own a business reach the stage of life when they should be able to
enjoy the rewards of their risks and endeavour, only to find that they have reached an impossible position and can't extricate themselves from their work.
In other instances something unexpected may occur, meaning that the owner of the business is no longer willing or able to continue working in the business.
Then, because there is no succession plan in place, the business falls away and the value built up over the years is lost.
To be successful in your business you have to be able to achieve the goals that you have set.
These should include what to do with your business once you don't want to, or are unable to, run it anymore.
The solution is to plan for what you want to do.
The best attitude to take is to focus on working to put yourself in a position where you are ready to sell or to encourage investors in your business, even if you are not planning to do these things immediately.
Just having the option available means a great deal and it also ensures that you will be focused on keeping your business as successful and as attractive to prospective buyers or investors as possible.
It's worth remembering that a business with a good record of profitability and with a sound administration and reporting system will be far more attractive and easier to sell than one that has to be quickly knocked into shape due to a crisis or an urgent need to sell. No buyer wants to purchase another person's problems.
Planning for succession can start at any time. You may have had that goal in mind when you started your business, or you may have just realised the importance of succession planning after being in business for some years.
Whatever the case, it is important to start this planning as soon as possible.
Ways of doing this include:
* Making sure that you have an effective administration and reporting system.
This is absolutely essential for a successful business and will provide a significant proportion of the goodwill when it comes to selling or to attracting investors.
* Nominating or identifying a successor or successors to manage the business and starting to plan with them how they may take over.
* If your home is mortgaged to provide business equity, make it a priority to clear this debt so that your home becomes mortgage-free and your business self-sustaining.
* Protecting your family with adequate insurance cover so that if a disaster happens they can employ someone to run the business until a clear decision on its future can be made.
With these elements in place, you and your family will be far more prepared for selling or leaving your business when the time comes. And you will be more assured of enjoying the substantial fruits of your efforts over the years, if you have control of how and when you leave your business.
You owe it to yourself and your family to start working on this today.
* Laurie Conder is a business facilitator and Business in the Community mentor co-ordinator at Enterprise North Shore. Contact: laurie@enterprisens.org.nz
* Send Mentor questions to: ellen_read@nzherald.co.nz. Answers will be given by Business in the Community's Business Mentor Programme.
Q: I own a family business and I am trying to plan for what happens when I retire in a few years' time. What should I do?
A: Laurie Conder from Enterprise North Shore replies:
Many people who own a business reach the stage of life when they should be able to
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