You may just be getting started or perhaps you are at the top of your game. You are not intending to leave or hand over your business for years to come. How could this possibly be of relevance to you? If the success of your business is not dependant upon your contributions then, by all means, stop reading. However, if you are responsible for adding any value to your business, please ask yourself: if I left my business today, how long would it last if I couldn’t come back? Is there someone else in the business I couldn’t survive without? My family relies on the business income. How long could we survive without my pay cheque? What would it cost to replace me? Can I be replaced?
If a business founder is not sufficiently prepared for their personal exit through a funded, planned succession strategy, then such an event is likely to leave the business in a precarious position. Without putting a concrete strategy into place for succession, there are still many ways you can prepare yourself for the unexpected.
Overall, having the right funding arrangements in place to protect against unplanned exits of essential staff and owners is key to surviving unexpected events. To achieve a smooth succession that results in a strong chance of the business flourishing across multiple generations, it requires some serious honesty and commitment from all parties involved to deliver a successful transition. Most importantly though, it requires forward planning and a clear set of actions to create the potential for success.
Communication is integral to the list of key attributes required in succession planning. Both you and the successor need to be able to communicate honestly, directly and respectfully to one another to ensure everyone is clear on the plan of action. Common goals should be shared by those involved. It is important that the goals are synonymous with achieving financial objectives that ensure both generations are financially rewarded for their efforts. In addition, attention should be given to ensuring that the leaving generation is sufficiently reimbursed for their life’s work and the outcomes they have achieved.
Here are ClearWay Advice and Financial Management’s (Progressive Wealth Solution’s) tips for preparation:
In addition to the above issues and concepts to manage, we recommend that you consider the following components as part of your succession strategy:
Succession planning is challenging but, professionally managed can create a legacy that aligns with the dreams and goals of the original business owner, whilst also passing on the business’ potential and wealth to be developed by the next generation. If you are seeking any assistance or information with your succession planning, contact us at ClearWay Financial Advice and Management or on 07 4078 0900.
ClearWay Advice and Financial Management is a Corporate Authorised Representative Representative No.473095 of Keystone Partnership Pty Ltd ABN 22 169 650 720, Australian Financial Services License (AFSL) No.466137.