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The 4 Big Succession Issues


The 4 Big Succession Issues

By , March 7, 2019

The succession process can be difficult to implement, particularly when business owners hold off until the last minute to pass on the reigns. Based on our research, there are 4 major issues concerning succession that must be considered in order to maximise value and successfully transition away from the business.

1. The ability to generate adequate financial returns

One of the strongest arguments you can place in front of a buyer that you have a business worth purchasing, or investing in if you choose to implement an Employee Share Ownership Plan, is a history of predictable, secure and sizeable returns to justify the outlay.

2. The financial capacity to retire

When the Aged Pension was introduced, life expectancy was approximately 64. Now, being closer to 80, the government has been at pains in the last 30 years to shift that burden back to the individual. If you are relying on your business to fund your retirement, the smartest thing you can do is start preparing as early as possible for this. Begin with the end in mind.

3. Trust in the abilities of the potential successor

The world changes, a new way isn’t necessarily a bad thing. Children need to be able to make mistakes to grow into happy, functional adults. It’s no different with successors – they need the latitude to make mistakes or they won’t grow into seasoned business owners, like you.

4. Potential successor’s interest in the business

Once upon a time, the routine thing was for the eldest child to take over a business. The stats have changed, only about 14% of businesses go to the second generation, and 4% to the third. It is perfectly fine to look further than your own family to find that successor who really has a desire to take the reigns of your business.

Regardless of whether your succession plan involves transferring ownership to a family member or key employee, or finding the right buyer, addressing the 4 big issues of succession will undoubtedly make this transition a successful and positive experience.

Leave on a high note.

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

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