The vast majority of organisations around Australia can be classified as a "lifestyle" businesses. This means that they have been set up and developed over the years under the watchful gaze of the founder, and while they may have been grown to quite a significant size, they still remain in the same form and function as when they were originally launched. Certainly, a number of other individuals may be responsible for managing the everyday operation, but any significant plans for the future come down to the founder. But what happens when it's time to retire? If you're in this position now, have you even thought about your exit plan and what is involved?
Making a Plan
Many owners have not made any formal plans to deal with succession and they should have, as if not, problems can arise. It becomes even more of a challenge if the key stakeholder were to "disappear" due to illness or even death. The value of the business could be strictly compromised, and this could affect all of the people who work there and many of the customers as well.
You Have to Do This Some Day
Certainly, serious illness or death could force the issue, but retirement will come in any case. In order to sell the business as a valuable and going concern, the exit plan has to be carefully crafted.
Some people may choose to hand over the reins completely at this point, or they may simply fade into the background slowly. The approach will affect the structure of the plan, and it also possible to develop two separate alternatives, so you can hedge your bets. Above all else, however, you need to determine who is going to be the successor and whether you will actually sell the organisation to a third party or focus on an existing business partner.
Keeping the Staff
Don't underestimate the position of your key personnel, as it does not necessarily follow that they will continue in that position when you hand over the business. Remember, between them they have a lot of experience and learned skills, and this may represent a large part of the business's value. You should try to guarantee that they will continue in your succession plan.
You may need to work with experts, like a tax accountant, to come up with a fair transfer or sale price, and you will certainly need to calculate the tax implications. If you want to be able to pass on some of your hard-earned money to your family, you'll want to minimise the amount of tax and take advantage of any relief rates offered by the government.
Ask the Experts
Firstly, you will need an attorney who can cut through the paperwork and consider all the legal obligations. They can also help you to incorporate your sale plan within your will, just in case. Importantly, you will also need a tax accountant, who will help you avoid making any big financial mistakesShare