What does the future hold for your business?
When business is going well, you concentrate on getting a good harvest in or increasing turnover and production. The last thing you want to think about is business planning for the future, for retirement or more unpalatable decisions about business affairs if key players were to die, become incapacitated or have a fundamental disagreement.
It is prudent to put early consideration into these issues and have discussions with those you are in business with. Some of the issues become more relevant as you edge closer to retirement but ill health can strike at any time. It can be a big relief to those involved if business affairs are already in order.
These are some areas you may wish to consider as part of planning for the future of your business.
- Meet with your business colleagues to review (or prepare!) a business plan. Whether you have been running the business in the same way for generations or are just starting out a new diversification venture, sitting down and carefully planning what you hope to achieve and agreeing steps to get there is fundamental to help ensure you achieve your goals.
- Review any existing arrangements including shareholder or partnership agreements to see if they reflect how you want to run the business or deal with someone leaving. Check who is actually a party to these agreements, sometimes new partners can be added or shares transferred without agreements being updated.
- Are there any provisions to deal with death or incapacity? Discuss what you would each like to happen in these circumstances.
- Seek advice on your tax position. Is the business structured to take advantage of any tax reliefs on death or retirement without compromising its trading position?
- Who will run it in the future? Consider how future generations can be developed and incentivised so that, if they form part of the succession plan, they are ready to take on the role when necessary.
Seeking professional advice early is invaluable. A third party can help to ensure that a meeting has a clear agenda and help to avoid personal issues clouding what is best for the owners and the business as a whole. Whilst exiting a business and handing it over to future generations can be a difficult process and a very sensitive one, early and clear discussions give all parties an opportunity to plan for the future.