Retirement often seems like a distant speck on the horizon, let alone handing over your business. Establishing a sound business succession plan is beneficial for most business owners and can be absolutely necessary for some.
Take for example a business owner running a number of very successful activities within his business, organised adeptly by his wife and providing a lifestyle for their family.
When niggling health issues persisted and could no longer be ignored, the diagnosis confirmed an extremely serious problem requiring immediate treatment which took the business owner out of commission straight away.
It did the same for his wife who was constantly by his side as treatment commenced and during the slow recuperation. Often we think that if one business owner is winged, then others can carry on but this is not always the case, especially in a family business. His take on this was, “I was galloping on a crystal horse, and then crashed into a brick wall. My wife had to pick up the splinters”.
OBT’s Rodney Turner says, “We all retire whether we plan to or not, and fortunately there is a somewhat positive ending. The warning did not go unheeded; as soon as it became sensible to do so the owners met with us about their existing succession and estate plans, and to review their provisions for risk and insurance.”
“Prior to our meeting, they were not planning to sell their business for at least another 5-10 years and were certainly at a loss as to how to best operate at minimum capacity in order to build business value and subsequently sell,” Rodney said.
Through OBT’s discussion and planning we helped the owners achieve the following objectives:
- Analyse their insurance needs and set up tax effective life insurance policies under superannuation as well as income protection and trauma insurance;
- Develop an estate plan and work with their legal adviser to develop their new wills and testamentary trusts;
- Prepare and monitor cash flow budgets in order to track financial needs and grow the business within existing financial facilities;
- Determine their retirement / succession plans and helped them improve the profitability of their business which in turn helped the business to sell sooner.
Whilst OBT obtained a great outcome for our clients we cannot stress the importance of having a thorough succession plan, estate plan and risk management plan for any unexpected events.
Don’t leave your loved ones to pick up the pieces! Talk with OBT about the arrangements in your business by contacting us.