Running a successful business can be a rewarding experience both financially and emotionally. But what would happen to your business if you or a close family member fell seriously ill? Or if you just wanted to take life a bit easier?

As much as careful thought goes into your business, financial and marketing planning, it's critical for the ongoing success of your business to pay equal attention to how you exit, and not leave it too late to start working on a strategy.

It should be no surprise that the "baby boomer" bubble that exists in the broader community is also evident in the small to medium business sector. Many of these businesses are also family owned and the average age of owners is mid 50s with a significant portion in the 60 plus years range.

The following four-step succession process is a common one undertaken by those transferring a business to the next generation or selling it to another party through a management buyout or open market methods.

 Step 1 - Determine the state of your business:

• Assess your current situation including such matters as debt levels. You need to get a clearer understanding of what is happening in your business and why. You will also identify areas where work needs to be undertaken to overcome weaknesses within the business.

 Step 2 - Work out what you as the owner will need in your retirement:

• You may need to purchase or fund a retirement property, have separate income earning assets, and a guaranteed, inflation-proof income.

 Step 3 - Develop and document a plan:

• The succession plan will be influenced by two dominant factors:

1.  
   1. What needs to be done to prepare the business for sale/succession.
   2. What can be done based on the time available before the sale.

You will expand on these two steps and then work through the steps that will be required to maximise the succession outcome. This will incorporate considerations such as whether additional savings, investment and insurance options are needed immediately to provide a capital sum for settlement later on (if possible).

Step 4 - Family meeting to discuss and follow up:

• Ideally, the whole family should be involved and any concerns or issues aired openly. After this meeting, updating of Wills and Memorandums of Wishes (for Trusts) need looking at, as do any legal requirements and taxation consequences of the proposed plan.

We are on hand to help you with your succession planning and documentation. For further information contact Paul Rosanowski on 03 546 0189 or