Why Every Business Owner Needs A Succession Plan
You are a business owner. You may not like to think about it but it is unavoidable that one day you have to leave your business due to retirement, health reasons or there is just a new opportunity to jump to. When that time comes, whether you want to sell your business to an external partner or transfer it to your next generation, a succession plan designed and implemented to suit your personal financial and lifestyle goals will ensure your transition will occur smoothly to your maximum benefit.
Succession planning should not be left to the last minute. If an unexpected event such as permanent disability illness or death were to occur, a succession plan that is set up early can be very useful in terms of avoiding future stress and conflicts. Early planning also helps you maximise the value of your business.
According to the Future Ready VII Report which surveyed 226 businesses and was published by Business Health, 70% of practices that did not have a written succession plan, their profit per principal was $235,049, while the 30% who had clearly documented succession plan witnessed a 42% increase in their profit. In addition, the 12% that efficiently put in place a succession plan which took all contingencies into account saw a 110% increase in their profit.
What To Consider When Developing A Succession Plan
When you make the decision to implement a succession plan, there are some vital financial matters that should be understood and considered:
- Retirement Income
- Sale Price
- Tax Implications
- Risk Management
- Legal Considerations
- Wills or buy-sell agreements
Understanding how stressful it can be when it comes to selling business and developing an effective exiting plan, BRG offers one-stop service so our clients are able to securely move on to the next chapter of their life.
To discuss further on the importance of a succession plan for your business or how we can help maximise your business value while minimising taxes and transaction costs, please contact us to arrange an appointment with one of BRG financial advisors.