Whether you plan for it or not, one day you will leave your business.
A succession, or exit plan outlines who will take over your business when you (or a business partner) leaves. Having a plan means that you can decide when and how you leave and what will happen to the business when you do.
Whether you decide to sell up, retire or have to leave due to health reasons, it’s important that you plan for that day. Many of us get to retirement age without either enough money or an exit plan for our business. Most business owners just assume that they will sell their business to fund their retirement without knowing how much the business will be worth or whether there will be a buyer with the funds to acquire it. If you have a business partner, the plan should include and be consistent with the terms of the ‘partnership’ or shareholders agreement that you have with them.
Not planning for your business exit almost guarantees that either you or your family will be inconvenienced and disadvantaged when the inevitable exit time arrives. If your business partner decides to exit the business first, then the consequences may be even worse.
There are many free templates and a lot of information available which you can utilise to get you started, remember that the more scenarios you cover, the more prepared you will be when the event occurs. I prefer to look at all aspects of the end of business planning together to cover the following so that all are consistent with each other and cover all aspects.
- Succession or Exit Plan
- Estate plan (wills and power of attorney)
- Partnership or shareholders agreement
- Retirement planning
Getting all of the elements right can seem daunting, however the most important step is getting started and nominating a trusted advisor to keep you accountable and progressing. Once you have these in place, review and adjustments can be easily made on an annual basis.
