PLANNING for the future is vital for anyone in business. And yet a written succession plan that outlines how a business will continue if management can no longer run the business isn't always a priority.
Research by Melbourne's Cameron Research Group in 2010 found that, of those who intended to sell their businesses within the next five years, 32 per cent had given no thought to a succession plan and just 12 per cent had a documented succession plan in place.
"Succession planning diffuses the time bomb ticking in your business," the founder of succession company Time Advice, Andy Gowers, said. "Everyone exits at some point; it is just a matter of why."
The succession-planning process should involve dedicated, experienced advisers. He recommended a core team consisting of a project manager, a financial planner, a legal eagle and your accountant. The process usually cost about $5000, Mr Gowers said.
"A succession plan is a will for your business and it will be needed at some point in the future," he said.
Leigh Riley has written Your Business Succession, a collection of case studies on succession planning. She said too many business owners mistakenly believed they could hang out the "For Sale" shingle and the right buyer would come along with the right amount of money to buy their business.
"Unfortunately, this method is the least successful way to yield the best outcome for the owner. This is because financial institutions aren't lending the way they used to for business acquisition, so willing buyers can't find the funding, which forces business owners to compromise on price."
A succession plan put Albert Bensimon's mind at ease. As the managing director of national and online jewellery chain, Shiels Jewellers, he implemented a succession plan a decade ago after deciding he wanted his son, Toby, to take over the business.
He consulted a number of professional bodies and other business owners to ensure he was able to train his son to take over the business he had built from the single jewellery store he opened in 1948.
"In our case, the business has grown from a single store to a national company, so Toby had to start at the bottom to learn what was involved before the business grew," Mr Bensimon said.
The federal government provides a succession plan template and guide at www.business.gov.au