6 considerations for your succession plan!

For many business owners, the demands of running their business day to day mean they rarely have the opportunity to think about their long-term future.  However, without taking some time to work “on” rather than “in” the business key questions can remain unanswered.

So, when is the right time will be to take a step back and begin to enjoy the fruits of those years of hard work? 

Paul Brown explains: "For some business owners, the idea of no longer working is frightening, but the majority will be hoping for a long and happy retirement.  At the same time, they all want to ensure their hard-earned legacy is protected. This can be achieved by leaving the business in the right hands after they move on. It is never too early to think about succession planning!

Key areas to consider include:

1. Never assume that your children will want to take on the business – ask the question!

The days when parents could rely on the business being passed to the next generation are long gone. We have seen many cases where a child's plans differ from the parents' idealism, and assumptions can often leave little time to come up with a plan B.

2. Do the current management team have the appetite to take the business forward without you?

If family succession is not an option then leaving the business in the hands of your trusted management team is a great way to ensure the culture and ethos of the business is protected.

3. Do you have a skills gap?

Whether family or management, often the appetite may be there but the skills are not.  Consider planning to ensure your successors are trained with the skills they may need, and filling any gaps that may exist.  Addressing this detail earlier in the process can save heartache and worry down the line.  The best way to ensure a successful succession is to make your input into the business redundant before the transition!

4. Do you want to benefit from the value in the business during your lifetime?

It is generally tax efficient to pass the business on through your will, but is that the right answer for you (and your successors)?  With careful planning, it is possible to release some or all of the value you have created in the business while still keeping the tax bill to a manageable level.

5. Have you considered selling the business?

You may decide that the best option is to sell your business, perhaps because there is no clear succession plan or simply because this will highlight a higher value. Preparing a business for sale takes a lot of work and you will need a clear view of the value you are looking for from the beginning.  Don’t guess what you need for a happy retirement - take advice and spend time working out the value, the number may surprise you!

6. Have you engaged right people?

People are key to business success and involving the right people for the future will ensure a smooth succession and maximise the business's value. Although there is no guarantee for future success, aligning the interests of the right people with yours, perhaps through a share in the ownership of the business, can be great to ensure they are with you for the long haul.

In summary, leaving succession to chance is a recipe for stress and heartache. We advise you properly plan for your business's future by making sure your succession plan and any potential successors are aligned. This can make the process much smoother and less stressful in the long run."

If you would like advice about any of the elements raised in this story, you can contact Paul on marketing@wrllp.co.uk or by calling: 01743 273273.

 

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