Succession Planning
When should your business be passed to the next generation?
Over the next decade, around one million Australian business owners—primarily Baby Boomers and older Gen Xers—will exit their businesses, marking an unprecedented wealth transfer known as the “Silver Tsunami.” Together, these owners represent 40% of small and medium enterprises (SMEs), yet only a third have structured exit plans in place.
For those considering an exit, now is the time to plan carefully and seek guidance to ensure a smooth transition and safeguard the legacy they have built.
It is essential to have a well-defined succession plan in place to ensure a smooth transition at the right time.
Key signs it may be time to pass your business to the next generation:
When you, the founder are ready.
Your own readiness to step back from the day-to-day operations of the family business is a crucial factor. You need to feel ready to hand over control, be confident in your successor and have a clear understanding of your future role. Will you exit completely, or stay on as an adviser, or board member?
When your successor is ready.
Your chosen successor also needs to be ready. It’s vital for your successor to have the necessary skills, experience and commitment to lead the business. They should also be prepared to take on the responsibilities and challenges of running a family business, through good times and bad.
When the business is looking stable.
Change can be a challenge in any business, so it’s important to initiate this change of leadership when the company is looking strong and stable. This gives you the foundations for a successful transition. Make sure the business is in good financial health, has a strong customer base, and that your market position is looking favourable compared to your close competitors.
When timing and conditions are right.
Handing the business over during tough market conditions is not advisable. Evaluate external factors such as economic conditions, industry trends and family circumstances and think about whether now is a good time for the transition – or whether it’s better to wait and ride out the storm.
When you have a clear succession plan in place.
A transition from one generation to the other is a complex and often challenging process. There’s real value to having a well-crafted succession plan in place. This plan will outline the transition process, roles and responsibilities, ownership structures and will ensure a smooth transfer of power.
Ending your own personal journey with your family business is a momentous step, and a transfer of power that will run far more smoothly with plenty of pre-planning.
Talk to our team to discuss your plans for the future, your hopes for the business and the key elements that should be included in your exit strategy and succession planning.
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