Exit with pride, profit with purpose – Have you sorted out your business succession plan yet?
Written by David Madge, Social Business Wales – Find out more about succession options at our seminar on May 24th 2018
Nearly 75% of welsh business owners haven’t planned for the future transfer of their business.
Many business owners in Wales see the growth and nurture of their businesses as a long-term commitment and devote a large proportion of their lives to it. But, if business owners do not have a robust exit strategy in place, they may find that the only option remaining to them when the time comes is to close the company and make their employees redundant.
Social Business Wales commissioned a report ‘Rooted and resilient: The case for employee ownership in the Welsh private sector’ last year which showed that as many as three-quarters of small and medium sized enterprises (SMEs) in Wales have not planned for the future transfer of their business.
The report was commissioned in response to anecdotal evidence that suggested that Welsh SMEs are not actively planning their succession. The report demonstrated that awareness of the need to plan for the future ownership of a business is low amongst many business owners. In fact, many business owners were not aware of the many issues involved in planning for succession or the very real dangers of not starting the process early enough. Many SME owners have a limited understanding of the detailed tax, legal and due diligence implications of selling their business and have unrealistic expectations regarding the price of their business.
Most business owners are aware of the most commonly considered options: business closure and asset sale; finding a buyer for the business; and, an MBO (Management Buy Out), but many are unaware of the potential benefits of employee ownership.
Employee ownership can safeguard both the business owner’s exit and the employees’ futures. The business sale can offer an income equivalent to that of a private sale. However, the business that is left is sustainable and run by those with the highest stakes in securing its future success.
So what is employee ownership? And how does it work?
Employee ownership exists when all employees have the opportunity to have a stake in the business. They offer a high level of transparency and sharing of information so that employees can take more responsibility in helping to drive performance, thereby benefitting from reward.
Installing employee ownership mechanisms and developing and engaging staff takes specialist knowledge, time and effort and the work needs to be undertaken from the moment the owner starts considering succession – not from the moment the owner starts trying to sell their business.
At Social Business Wales we provide one to one support to businesses interested in succession planning and are the ‘go-to’ organisation for employee ownership support in Wales.
With more employee ownership adopted as a business succession plan, especially for SME and family businesses with no natural successor, there is more potential of sustaining the business, its employees and its suppliers in the region, rooting it for the future.
If you are interested in finding out more about your succession options and more about the potential benefits of employee ownership (including some significant tax benefits for you and your employees), come to our evening seminar on Thursday 24th May at the Holiday Inn Express, Coryton. We are delighted to partner with the Federation of Small Businesses in Wales to promote the event which will answer your questions on succession options as well as offer plenty of opportunity for networking with other business owners.
To book your place visit:
Social Business Wales is funded by the European Regional Development Fund and the Welsh Government.