Strategy weaknesses impact your business succession profitability

Business succession problems are the result of one or more of the  five weaknesses I identified in my previous post 5 Reasons Business Owners Fail To Exit Their Business With Maximum Cash Flow And Profit

The first reason is strategy weaknesses.

8 key strategy weaknesses have the potential to impact the success of your business succession, and therefore your business exit cash flow and profit.

8 Strategy Weaknesses

1. When you fail to understand and respond to the laws of supply and demand in your market place, you put your business exit strategy at risk
2. If you are not thinking like a buyer when planning to sell your business, you probably haven’t prepared your business well enough to be attractive to a purchaser and therefore will fail to achieve the best selling price
3. Failing to understand that you must have evidence of  maximized business profits in order to boost your business valuation and influence the potential selling price
4. Failing to inoculate your business against Leaky Bucket Syndrome™. This is a key element to building a valuable business that will generate the business succession result that you want – maximum cash flow and profits
5. Failing to value your business properly. A proper valuation is the only way to validate the price on which you base your business exit strategy.
6. Failure to adjust your business tactics to the current economic climate. You want to take an active interest in economic matters that could impact the performance of your business, and which would enhance or detract from your business valuation.
7. Failing to be transparent about your business to a potential purchaser can undo the sale in a way that could harm your business value and your reputation. Understanding the importance of communicating the value of your business to the market place is just as vital as operating the business to capacity
8. Failing to understand that Shareholder Agreements are usually an unsuitable mechanism for handling all the issues involved with your business succession planning.

Business succession planning case studies

In a future blog series I’ll share some case studies that will help you to understand the influence of each of these weaknesses in detail, so you can plan how to overcome these problems before they can have any impact on your profitable business succession.

The right business exit strategy can put the caviar on your crackers

If you want to make sure that you have the right business strategies in place so that you can have a little (or a lot) of caviar on your crackers, then you want to take advantage of these resources to make a start on your profitable business exit strategy now:

1. Take the Business Exit Quiz (5 minutes of your time) and find out where your exit strategy may be letting you down, and how to improve your chances of building a business for maximum profits and cash flow
2. Read my book “Your Business Succession” to discover what you want to do to ensure you will not become one of the poor statistics outlined earlier in this article
3. Contact our Business Succession Strategy office to plan your business succession strategy, so you can ensure that your business does not have any strategy weaknesses that will reduce your business succession profitability.

To Your Profitable Business Exit,
Leigh Riley

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Every business owner’s dream is to eventually exit their business with maximum cash flow and profit, assuring a comfortable retirement income as a reward for their years of dedicated hard work  To achieve this you will need to maximize the price you receive when exiting if you want to enjoy the comfortable retirement you’ve been hoping for.

Alarming facts about small business owners and retirement savings

Australian statistics reveal that only 5% or retiring business owners will have sufficient retirement savings to be completely financially independent.  In the US the average retiring business person has enough savings to fund approximately 8 years of their retirement, but will on average live 17 to 18 years beyond retirement age.  Facts such as these really bring home the need to focus on succession strategies that will boost your business valuation so you can exit with maximize profits and retirement income.

5 reasons business owners miss out on maximum retirement income

While some business owners will be sufficiently prepared to reap the rewards of years of effort, the reality is that many will fail to maximize their business value in a way that could ease their financial burden during the next phase of their life.  Here are the 5 main reasons why:

1. Strategy Weaknesses involve 8 key areas of failure to have the end in mind when operating their business.  The strategic decisions made in the business do not adequately take into account market demand for the products and services they provide, nor the market conditions in which they operate. They lack a long term customer service focus, and fail to recognize the competitors they’re up against. Two types of competition exist -  competition for customers who use their services, and competition for potential purchasers of their business when they exit.
2. Structural Faults encompass 4 main areas of fault when a business lacks a management culture, and fails to understand the associated tax implications of the ownership structure of a business, particularly when exiting.  To protect yourself against structural faults I can’t emphasize strongly enough that you need to use a team of specialist advisers to collaborate and mitigate the 6 D’s of Succession.
3. Situational Errors takes into account the 6 identifiable situations that, without adequate contingency planning, can impact your business value and move your financial success beyond your control.
4. Sustainability Breakdown comprises the 3 factors that impede effective business continuity and your ability to handover your business whilst receiving full financial benefit for a lifetime of effort.
5. Steering Off Course involves leadership and management challenges and embodies the 4 business succession leadership challenges that you must overcome to ensure your business remains on track for maximum profits and income from enhanced business valuation and sale price when you exit your business.

How ready are you to take on the challenge of overcoming the 5 reasons too many business owners fail to achieve the profitable exit they had hoped for?

Business exit strategies to achieve maximum income for your retirement

1. Take the Business Exit Quiz (2 mins of your time) and find out where your exit strategy may be letting you down, and how to improve your chances of building a business for maximum profits and cash flow
2. Read my book “Your Business Succession” to discover what you want to do to ensure you will not become one of the poor statistics outlined earlier in this article
3. Contact our Business Succession Strategy office to plan your business succession strategy, so we can eliminate the stress of making the right decisions for your best chance of maximizing your business valuation for a profitable exit.

To Your Profitable Succession,

Leigh Riley

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