Family - owned and run businesses
Family - owned and run businesses.
Build Value to Sell or pass on to the Family
Family businesses could be facing a leadership crisis, with few businesses in good enough shape to be handed on to a new owner.
Many owners have plenty of plans in retirement, and adequate funds, only one-third have a business that is ready to pass on.
That challenge is made even more difficult by the fact that a large proportion of owners suggest the younger generations of their families are not interested in actively managing or taking on the business.
There was also a lack of awareness from business owners about the need for succession, and fewer considered selecting and training a manager as a critical issue.
Many of today’s family businesses, owner-managers are aged between 50 and 59 years of age, while about a quarter were 60 to 69 years of age.
There are Owner Managers that have given some thought to handing on their business or selling them, actually putting some plan into place is neglected.
A business when well-run can go on through the ages, longevity strategies, such as management plans, marketing plans, system plans, growth strategies, staffing strategies, IT Strategies, financial strategies, and support strategies, these plans written down and activated give the business value and it is these things that Buyers are looking for.
A Buyer will pay more for an organised business than a business that is run on the ‘Trust me, it’s a great business’ model.
If these thoughts are far too complicated for a humble Owner Operated business. The first step, should be to simply write out what you do and how you do it, what are your responsibilities and your job position / description. Then simply look to replace yourself.
You then have time to look at the other plans and strategies listed above to give your business value.
If your business income and profits will not allow this to happen, then the plans and strategies take on a simpler form. Describe your product (s) and or service. Give a good description of your clients and customers. Write out a job description for yourself and any other staff. List all your suppliers and products or materials they supply. Etc. These details take away some of the worry of a Buyer about the business and allows them to carry on the business after a sale.
However, a succession plan needs to be discussed well in advance. Whether a family succession or a business sale. Either way many of the above-mentioned plans and strategies are important for the continued success of the business. If the succession plan is a Business Sale, then activating the plans and strategies will add value to the business or make the business more readily attractive to a Buyer.
If the Owner operated business does not have all the necessary plans and strategies in place, then one should allow 6 to 12 months to get everything ready.
It is always better to put things in place early, by running a business as though it is ready to sell, puts your business to the front to take advantage of what the commercial world has to offer.
This will enable the business owner to implement the most appropriate exit strategies for the particular exit option. Preparing a business for a successful sale or preparing for a smooth family succession.
Sometimes the interests of the family as a whole will be best served by realising the current value of the business through a sale, rather than risking that value by passing it to less able or less committed family successors.
Please contact Business Brokers Network Australia or any of the BBNA Business Brokers or Business Valuers.