Now's the time to plan
NOOSAVILLE-based financial planner Duane Potter said many businesses get so caught up in the “now”, they forget to plan for the future.
The Vine Investment Planners director said succession planning was one of the most challenging aspects of running a business.
“It might be hard to have a long-term vision at the moment, but business owners cannot avoid it,” Mr Potter said.
He said research showed 70% of family-run businesses thought succession and retirement planning was important, but only 12% had a documented plan.
He said succession planning was like making a will for a business and should form one of the key elements of a business plan.
Planning should begin at least five years before exiting the business, he said.
“In order to transition a business to the next generation, or to a new owner outside the business, getting the structure right is imperative,” he said.
Here's Mr Potter's succession check-list:
- Develop a long-term plan that addresses professional and personal objectives.
- Decide how to transition the business - family or external purchase.
- Establish the purchaser's needs and motivations.
- Build the business to be financially sound.
- Determine the tax implications in exiting.