Plan Now to Hand Over the Reins

Whether you’re new to business or you’ve been operating for some time, odds are you put a lot of time into setting up your business. Probably the last thing on your mind was thinking how you were going to sell your business, or pass it on to the next generation, in the future.

In fact the best time to start succession planning, or planning to sell, is at the very beginning of the life of the business.

You need to plan for selling or succession with the same attention and thought that you put into your business, marketing and financial planning. It’s critical to the ongoing success of your business.

Yet it is estimated the vast majority of family-owned businesses do not have a formal succession plan in place. Losing a key person in the business with no obvious successor can do serious damage to the value of the business. As well, there will be financial arrangements and rearrangements to be made in the event of the death, disablement or retirement of a family member which, unless planned for, can have drastic consequences.

In the worse case scenario the business itself could collapse and the family would be left with immense problems.

Sadly, the vast majority of New Zealand businesses do not reach the second or third generation, in most cases because of improper planning.  Evidence indicates that only businesses that have nurtured and developed the obvious successors within their business, both family and non-family, are likely to defy the statistics and continue to succeed.

It’s the same rationale for non-family businesses. One day you will need to sell your business, and, however distant that may be, you still need a succession plan in place right from the beginning. Your business needs to stand alone, without being too reliant on you. You need to create that culture at the start and continue to make it a part of your business. 

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