Why every business ought to start 2016 with a Succession Plan?
It’s never too early in the lifecycle of a business to think about a Succession Plan. Leave it too late and the number of exits available to you are shut off.
Putting in place an exit strategy today, even if you’re still some years away from retirement, has a number of financial and emotional advantages for you and your business.
What is succession planning?
In a nutshell: finding a suitable successor with the skills, the passion and knowledge to lead your business.
It’s also about tidying up paperwork and preparing accounts accurately so it’s more efficient ready to be taken over by your successor or to maximise resale value.
Why do you need succession planning?
Firstly, if a business owner or partner leaves or dies suddenly and there’s no Succession Plan the business is left in chaos. Knowledge is lost, staff morale falls and value of the business plummets.
Succession planning involves establishing clear business objectives, preparing accounts, organising paperwork and making your business more efficient, more profitable and ready for a strong valuation.
Now, let’s confront the emotional side of succession planning.
With any business that you’ve nurtured and grown, particularly a family run business, the emotions run high and can cloud decision making.
An impartial expert asks the difficult questions.
Answering difficult questions opens up a rational and honest discussion. Assumptions about who will take over, who wants to take over, when they’ll take over and even who doesn’t want to take over are discussed and dealt with.
In turn you alleviate anxieties for employees, family members and of course yourself.
Tax Planning and Succession Planning?
Succession planning and tax planning work hand in hand.
You’ve worked hard to develop a successful business. In time you’ll hope to reap what you sow well into a long, happy and financially secure retirement.
Tax planning is key to preserving your personal wealth and dealing with inheritance tax and capital gains tax. Only an expert in tax can fully understand the complexities associated with changing ownership of a business or dissolving company assets.
What are my exit options?
- Transfer ownership to family member or non-family member
- Management Buy Out (MBO) /Employee Buy Out
- Sell up the business
- Voluntary Liquidation
If you have any Succession Planning questions, like the ones below, then call us now on 0141 290 0262?
- I want to stabilise my business for a takeover?
- How can I find the right person to takeover my business?
- I want to know the true value of my business?
- I want my business to attract buyers?
- How do I manage Capital Gains Tax and Inheritance Tax?
Working for the Inland Revenue (HMRC) I witnessed cases of retirees having worked hard and finally enjoying retirement then an unexpected brown envelope arrived demanding back-dated tax claims.
Don’t let this happen to you – ask an expert to prepare a Succession Plan now.
Warm regards
Bruce Wilson
Tax Expert