Next Steps for Baby Boomers (b1946-1964)
Do you know a business owner aged between 53 and 71?
If, you know someone who fits this description, then they will be of the baby boomer generation. Historically, this age group envisages 65 as being the age they should retire at. So, what plans do they have for their business when they retire?
For many business owners, they have not considered the question as they are so busy working in the business, or, if they have, have not reached an agreeable solution. SMEs form the greatest number of businesses in the UK. They differ significantly from larger businesses as the leadership does not change frequently, if at all, and succession planning is not an activity which is practiced regularly. If a succession plan is not in place, then the financial future of the owner and an exit plan is unlikely to be in place either. So, what needs to be done?
Firstly, the owner must consider their financial requirements for retirement and see how this compares to the income from any investments they might have made. They need to consider their health and what they might do during their retirement. Different people view retirement with different levels of apprehension as the purpose of life shifts from running their business to enjoying the fruits of their labours.
Can the business function without you?
Secondly, they need to work out an exit plan so that the business can function without them. This is not straightforward. The owner is often in a trap. They are the focal point of all activities. Whilst this means the business is controlled, it also means it could run out of control without them. Developing an organisation structure to release the owner must be managed sensitively with the staff.
Improve the value of your business
Thirdly, the business should be valued so it’s worth can be added to the investment total. If the valuation does not bridge the gap between the required figures to retire and the investments calculated earlier then some actions can be taken to improve the value. But performing the actions will take time.
Finacial Structure during the transition
Finally, the financial structure for exiting the business, to realise the value should be worked out. There are a number of models to choose from or use in combination. Having chosen a model, it must be formalised. Although the process may appear complex, once embarked upon it can become as exciting as starting the business and seeing it grow. However, selling or passing on a business, is preferable to letting the business fade away both for the owner, their family and the staff.
If you would like to find out if it is possible to increase the value of your business before you sell or pass it on, then complete this short questionaire http://www.thevaluebuildersystem.com/survey-peter-searle or email me , PeterSearle@businessdoctors.co.uk if you have any questions about any of the other steps.
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