Succession & Exit Planning for Family Businesses
How many times have we heard the phrase, ‘My Business is My Pension’? Too many to count. This may be the case for many business owners that they intend to sell their business in the future to provide an income throughout the rest of their lives. In some cases, this is very successful however in other cases, an ever changing world and advancing technology means that what was valuable yesterday has been superseded by something else.
Our of our clients specialises in this area and has seen first hand the challenges, particularly with family businesses this can cause.
"The UK Family Business Sector 2017 -18, published by the Institute of Family Business in April 2018 highlighted how valuable the family business sector is to the UK economy and society as a whole: -
Family Businesses: -
- Employ 12.2 million people.
- Generate a quarter of UK GDP
- Pay £149BN in tax – more than the NHS Budget in England
- 88% of manufacturing Businesses are family owned.
So how important is your family business to you, your family and your employees? – I suspect hugely important.
So why do so many family businesses not talk about either succession or exit planning? The subject matter can very easily be “An Elephant in the Room”
In my experience those business that have an exit / succession in mind out perform those that do not. Commencing the plan 5 years before is an ideal situation.
Many people believe that succession planning is the same as Exit Planning, but it is not. To help you clarify the boundaries of each activity can I offer the following descriptions.
Succession Planning is the process of identifying successors within a business and providing them with an opportunity to develop their skills and experience in order to replace the existing leaders of the business at a future date. Succession Planning primarily focuses on the transfer of leadership and/or management from one generation to the next within the business. Succession Planning is essentially a Business Continuity approach, which is one of the critical Components of Exit Planning.
Exit Planning is the comprehensive analysis of all the factors that impact a business owner. Exit Planning addresses a wide variety of issues that are important to business owners, including their current and future planning with respect to their business (its value, its employees, its position in the market), their family and their community. Exit Planning starts from the perspective of the business owner’s goals and objectives in each of these critical areas, along with his or her current and projected resources (business value, personal and business financial resources), to identify the specific strategies and steps that are most likely to allow the business owner to reach his or her goals.
Working with your trusted professional team of advisors during this period can have great benefit via their independent view / critical friend status.
Ensure your business is “Fit for Future by talking to your family” and professional advisors about Succession and / or Exit; be open, honest with your yourself and see the difference it can have".
We work with clients throughout their business life cycle but as Exit and Succession Planning starts to become relevant, we help them in the following areas to ensure that they are prepared for whatever the future holds:
- Financial Forecasting to ensure the sale or income from the business will be enough to support their needs.
- Advice around qualifying investments to ensure you don’t lose any business property relief that may be relevant.
- Maximising pension contributions from the company using carry forward allowances.
- Lifestyle coaching to help with what the future holds.
If this is something you would benefit from then contact KBA on 01942 889883 for an initial meeting at our expense.