Thinking of retiring? Don’t be the last Jedi in your business – create your own group of Jedis to take the business into the future!
It’s that time of year where we look to the future and think about our plans and, for older business owners, that may include deciding when to retire, and how many more years to work in your business. That’s why it’s so important to systemise your business so your valuable knowledge is passed throughout your team – creating your very own team of Jedi’s!
Paul Whitney of Hallidays Accountants and Business Advisors explain more:
We spend many hours with financial advisers, looking at how best to save for our retirement, building a pension, deciding upon investments and returns. Yet the biggest asset for many of us is our business, and the time spent ensuring we maximise that value is often lost in amongst the day to day running of the company. Years go by, and we assume we are increasing our business’ worth all the time, but just how valuable is your business and how will you practically achieve that when you exit?
Here are 5 points to consider:
• How are you going to exit? If you are selling the business, who to? Is there a trade buyer who is already showing interest, or is there sufficient merger activity in your sector for you to assess if your business meets an acquirer’s typical parameters? Have you got anyone to sell to in your trade or should you be considering an internal buyer, the team of Jedi’s you have created? Or a candidate you may have to yet identify and recruit? The more potential buyers you have, the more chance you have of maximising the chance of selling your business for the value that you believe it is worth.
• When are you going to exit? This will of course be a personal choice, but you should also have an eye on the landscape in your sector. Is there consolidation activity already? If so, don’t miss the boat! Once a purchaser has made a few acquisitions, they won’t be able to handle any more whilst they integrate and settle their new group. Is there competition from overseas on the horizon or are there new products and technological advances in your market which could affect your valuation in a few years? Would it be preferable to sell earlier rather than later? Carry out some research and ensure you have facts, rather than just gut feel.
• What does your business look like to a potential purchaser? Is it a risky proposition, or is it a well-oiled machine that generates profits without any hassle, even without you being there. The more systems and efficiencies you can implement, the more it appears that the business can stand on its own two feet and will calm the concerns of a buyer. Take a look how Business AM: Step 9 – Systems for growth can help achieve this.
• Can you be seen? If an overseas buyer, for example, was looking for a company in your sector, how would they find you? Ensuring a good web and social media presence, being a member of the trade bodies, winning awards or having positive mentions in the trade press, all contribute to your profile. Make sure you can be found!
• Make a plan and be organised. Once you have reviewed your business from the point of view of selling it, rather than running it, you may recognise that changes need to be made to ensure it can be attractive to as many potential buyers as possible, and achieve the highest post-tax value when you sell your shares. However, these changes don’t all need to be made at once, and we can help you prioritise with a timescale for the project, so that it doesn’t become overwhelming, but carried out fully. It will allow you to mould your business to your ideal purchaser.
Have a great New Year and focus on creating the most valuable business in the galaxy.
With thanks to Paul Whitney, Corporate Finance Partner at Hallidays, for providing his Expert Opinion