How do I set the business up for succession or an exit in 3-5 years?
A business should start planning for a succession or an exit at least 2 years in advance.
Firstly, set the strategy (3-5 year time horizon).
Secondly, clearly communicate the strategy and align all stakeholders.
Succession – identify and prepare the successors – in terms of training, mentorship and gradual delegation of responsibilities, as well as rounding out the management team.
Exit – execute short-term strategy and clean up financial records, liabilities etc. Can identify the potential partners / acquirors down the line.
Either way, it is important to set the business up for success post transition, specifically:
- Assess strategy and financial health. How can the business diversify / grow revenue? Can it streamline operations to enhance profitability / cash flows? Is there capital required for investment?
- Strengthening governance and structure. Establish a board of directors (corporate or advisory or family constitution / council) to provide independent oversight and organization of books and records (financial, legal, HR, etc)
By QLD based Family Business Accredited Advisor
