Advice on succession planning from National Australia Bank’s Geoff Greer.
It is universally acknowledged in business that success does not happen by accident. While in previous years, a booming economy has meant businesses have enjoyed some success without a great deal of planning, this is clearly changing with the slowdown of the global economy.
Geoff Greer, Regional General Manager of NAB Business Banking Australia, says: “As we’ve witnessed recently with the global credit crisis, economic conditions can vary greatly from year to year. This is why it is especially important for smaller businesses to factor in the economic climate when developing their business and succession plans.”
The National Australia Bank’s Business Planning Survey has revealed a resounding level of complacency amongst business owners when it comes to planning for the future, with 40 percent not completing a business plan.
Despite being faced with increasingly uncertain economic conditions as 2009 approaches, 32 percent of Australian SMEs believe they are too small to warrant a business plan, 21 percent lack time to write one and 15 percent believe they don’t need one.
“Australian businesses are taking a big risk if they enter 2009 without an up-to-date business plan. A good business plan should act as the seed from which your business will grow – it need not be long and complicated, but it should provide your business with a direction, taking into account all the variables and external factors which affect your business.”
“A business plan that incorporates financial planning and succession planning will help your business to grow, allowing you to identify your business’ strengths and use them to your advantage. For family businesses in particular, passing the business down to the next generation needs to be planned in order to continue to grow the both the business and the family’s interests,” Greer said.
A good succession plan will enable a smooth transition; a ‘changing of the guard’ as it were, with less likelihood of disruption to your current successful operating structure and/or family values. By planning your exit well in advance, you can aim to maximise the value of your business and ensure that it meets the future needs of all stakeholders, ensuring the legacy of all family members.
“Putting a succession plan in place for your business is a great way to ensure you, your family and your business associates are protected while also ensuring your hard work and dedication lives on in the business, well into the future,” he said.
There are many factors that you need to consider when developing firm succession plans for your business, whether family members want to buy into part or all of the business, or whether the next generation will look at diversifying your product offering, to name but two.
A succession plan will go a long way to ensure the continuity of the business and that the transfer of ownership is orderly and more importantly, can be funded in the appropriate manner. It means that your family will be looked after should something happen to you. And if you are joint owners, if something happens to a co-owner, you will be able to continue running the business.
Drawing up business succession plans is complex and your financial planner or specialist will consult other professionals, like National Australia Trustees and your business banker, to provide you a complete range of solutions. “It is important to get support and advice from your business peers and experts who have an in-depth knowledge of finance and business. Planning for business and its future, along with your own, is the only way to ensure you get there,” says Greer.
Good business succession planning will help you to:
Maximise the value of your business.
Exit your business with maximum profitability
Lay solid foundations for the business’ continued success.
Ensure your legacy is continued forward in the business
Important note
NAB has not taken into account your objectives, financial situation or needs and recommends that you consider whether any advice in this article is appropriate for your circumstances.<–>
