The average age of business owners is increasing. Many are looking at retirement as an almost unattainable goal. The choices are stark for businesses that are heavily owner reliant – sell below your ideal value or close the doors and walk away. I’ve seen many business owners simply lose their passion and energy for their businesses. Yet they still struggle on because the idea of letting go is too much to bear.
The baby boomer generation is currently entering the retirement age window. This is facilitating the biggest potential transfer of wealth in the history of mankind. Or the biggest loss of value if businesses are wound up slowly over time. One client articulated this succinctly “I’m worried I am going to die before I get the value out of my business”. It was a tough thing to hear from someone who had built a sizable and successful business yet saw no way out of it.
What Are Your Options?
If you don’t want your business to fade away, what are your options?
Fading away is not a palatable or attractive route, though many businesses sleep walk into this. The first step is recognising the path you are currently on and becoming aware. Have a plan to extract as much cash as possible. Eventually closing the doors should be an active choice rather than a passive end state. The problem with this plan is that every year becomes heard to extract cash. The business crumbles much more quickly when it has no investment. Stakeholders quickly see there is no future and make other choices.
Like a house that has been lived in for decades, your business will likely benefit from a renovation. This doesn’t have to be as painful as you might imagine. It does need a new mindset. Literally getting your house in order can add £’000’s (if not millions) to the value of your business AND make it more attractive to a buyer in the first place. There are some simple steps that will instantly improve your business both for you and your stakeholders now AND in the future, regardless of where the ownership sits.
Simple Steps:
- Cash flow improvements
- Establishing systems and processes
- Improving organisational structure i.e. making sure everyone knows who does what and when (you don’t need hierarchy but equally you need to avoid anarchy!)
- Reducing the reliance on one person (as the owner are you the bottle neck for decisions?)
- Building closer business relationships with your customers and suppliers
- Having a succession and exit plan that you can implement
This may feel daunting in the beginning. If you start with the end in mind and get the right help from people who have been through this many times before, you’ll be ahead of the competition. You could be looking at a brighter more financially secure retirement soon than you think.
Need Help?
Succession Plus helps mid-market business owners design and implement a business succession and exit plan to maximise sale value on exit. Having been focused on Business Succession and Exit planning since 2009, Succession Plus is well placed to help you realise the goals you set for your business succession, transfer to the next generation or sale.
