Succession planning is critical for small business owners who want to ensure their business thrives even after they step away. Whether you’re planning to retire, sell, or transition ownership, having a clear plan in place will help you maximise your business’s value and secure its future.
Starting and running a small business takes guts, determination, and a strategic mindset. However, many business owners overlook the importance of planning for their exit until it’s too late. Recent economic challenges have forced some to rethink their exit strategies, leading to early sales or reduced business value. By thinking ahead, you can avoid these pitfalls and ensure a smooth transition on your own terms.
When considering succession options for your small business, here are five common approaches:
- Close the business and sell the assets – If no viable buyer exists, this may be the last resort.
- Sell to a family member – Keeping the business in the family is often a preferred choice for owners with family involvement.
- Sell to an employee – A key employee already familiar with the business can be an ideal buyer.
- Sell to an outside party – Marketing your business to potential buyers who are seeking opportunities in your industry.
- Gradual buy-out – A phased transition where ownership is gradually transferred over time.
Preparing for a sale
Preparation is essential to maximise your business’s value and ensure it can run smoothly without you. Here are key steps to consider:
- Systemise your operations: Make your business less reliant on you. Implement clear processes and systems that allow the business to function as a standalone entity.
- Maximise profitability: Focus on creating a profitable business that will be appealing to buyers. Don’t prioritize minimizing taxes at the expense of your bottom line.
- Plan early: Succession planning should start long before you’re ready to sell. Early planning gives you more control and more time to optimize your business for a successful transition.
Don’t put off your succession plan – even if you are not ready to sell
If you haven’t started your succession plan yet, now is the time. Having a plan in place gives you peace of mind and a better chance of securing the future of your business. Reach out today, and we’ll help guide you through the process.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
