Today there are more than 500,000 businesses in New Zealand and a large number of these are owned by the baby boomer generation. Most of these have no business exit or succession plan, yet most hope to benefit from the sale of their business to help fund their retirements.
This generation is now approaching the age where they are looking to move into a less demanding role or to retire from owning and operating their business. As this generation steps down from their businesses, a younger and smaller supply of Generation Xers will be seeking to step up.
“Unfortunately, an oversupply of poor or average businesses coupled with a smaller, less resourced and more particular group of buyers is likely to result in a number of businesses failing to sell” says Richard O’Brien from Business for Sale website nzbizbuysell.co.nz. Having a plan and being prepared well in advance is your best guarantee for a sale and a more secure financial future.
If you’re a small business owner considering selling your business tomorrow or in even five or ten-years’ time, then in addition to your business plan, you need to have a business exit or succession plan - a plan that will help you sell and achieve your best result.
A business succession plan should be a well-considered and regularly reviewed standalone document. It is important to document your preferred options and how you propose it will work; be it that you transfer the business to a business partner, pass it onto a family member, sell to an employee or just list on the market to sell to a third party.
Succession plans will help you build a more robust business and structure, help you retain key staff, and build the value of the business so it’s easy to transfer the ownership when the time comes. There are also the short-term benefits from documenting and streamlining your business, generating more sales and cashflow, along with creating less reliance on you, allowing you to be business sale ready at any time for whatever reason.
It’s good to use a professional here to help construct a balanced document of wishes to avoid issues later on. A well-prepared succession plan will benefit everyone should it be a quick sale or a planned exit.
For more information on business exit strategies and building the value into your business when selling visit www.nzbizbuysell.co.nz