Business Exit Profits Key #2 | Video

One of your core business exit goals is to keep as much of the profit from the sale of your business as possible. To achieve this you want to have a business succession plan that takes advantage of Capital Gains Tax Concessions that are available to business owners who meet certain criteria.

View this short video to discover four types of Capital Gains Tax (CGT) Concessions that may boost your business exit profits.

Four tax concessions that may provide capital gains tax relief when you sell your business in Australia.

These only apply if your business meets the definition and eligibility criteria of a small business.

1. 15 Year Exemption provides 100% capital gains tax relief.  It means your business must have been operating for longer than 15 years without any change to its structure or ownership during that period and to qualify you must also meet certain further criteria.
2. 50% Reduction Exemption can provide 50% relief from capital gains tax, but only if you meet the eligibility criteria.
3. CGT Retirement Exemption provides 100% capital gains tax relief on up to $500,000, but only if you meet certain eligibility criteria which may vary with your circumstances.
4. CGT Rollover Relief provides 2 years automatic deferral of capital gains tax.  It applies only if you meet the eligibility criteria and you are using the proceeds from the sale of your business to purchase another business.

Capital Gains Tax Eligibility Rules

The eligibility rules are too complex to go into detail here, but you can read all the details in Chapter 16 of my book ‘Your Business Succession: How To Exit Your Business For Maximum Cash Flow And Profits’ which demonstrates the effects with real life case studies.

To be certain of your eligibility you should seek the advice of a qualified, certified practicing accountant (CPA or CA), and you want to do this well before leaving your business so you can make full use of the available concessions.

More Business Exit profits Keys

Read about the other six Business Exit Profits Keys in detail here.

Secure your own copy of my book ‘Your Business Succession: How To Exit Your Business For Maximum Cash Flow And Profits’ for real life business exit case studies that show you what you want to do to to ensure your cash flow and profits are maximised when you leave your business, through either planned or unplanned circumstances.

To Your Profitable Business Exit,
Leigh Riley

Previous article in series | Next article in series

Finally ‘Your Business Succession’ book is ready to purchase from the publisher

After almost 23 years of focus on winning the best possible personal and business financial outcome for my clients, reviewing business exit strategies with allied professionals, and continual research into best practice in business succession strategies, I can’t tell you how excited I am to finally hold this book in my hands and be able to share the valuable information it contains with business owners and professionals who advise business owners.

Proven strategies to boost business profits from start up to step down

‘Your Business Succession’ contains more than 20 detailed case studies, dedicated to all business owners who labor to see their legacy live on. While this book recommends the Stephen Covey principle of starting with the end in mind (7 Habits of Effective People), I can’t stress strongly enough that if you are a business owner who did not start with the end in mind, then the time to start planning for a profitable business exit is now.  Throughout the case studies I reveal the mistakes that you must avoid if you want to exit your business with maximum cash flow and profit.

How to enter, execute and exit your business for maximum cash flow and profit

‘Your Business Succession’ identifies five reasons too many business owners fail to achieve a profitable exit from their business, and also details the exact plans and processes you must follow for your business to achieve maximum cash flow and profits, not only as you exit your business but at all stages of the business cycle.

Advance praise for ‘Your Business Succession’ book

1. “A very timely book. A huge tsunami of business sales is about to happen… in this book, no stone is left unturned. For the business owner prepared to read the book from cover to cover, here is a sure guide on how to conduct a business succession.” Anthony Jensen, AEOA committee member, and currently a lecturer with the school of economics and business at Sydney University.
2. “In ‘Your Business Succession’, Leigh Riley brings real world experience with passion, and solutions to the issues facing business owners leaving their business. This is very positive reading.” Helen Hasty, former manufacturing business owner.
3. “Succession planning is a huge latent problem for our SME market. This book is an end to end toolkit in one place for a proprietor considering succession, and is a solid resource for any professional advising to business owners.” Australian executive business banker.

‘Your Business Succession’ will help you assess how well prepared you are to:

• ensure the quality of lifestyle you’ve worked so hard for
• maximize your business valuation and sale price
• find the right successor
• pre-arrange the sale terms of your succession to lock in your business valuation
• safeguard the value of the business legacy you will leave
• remain in a position of financial power and security at each phase of your business
• be released from debt commitments and exit your business with financial freedom
• maximize your cash flow
• maximize your profit
• exit your business with ease and peace of mind

I trust you will not only enjoy reading this book, but also benefit financially from the valuable information you will discover in the 366 pages of ‘Your Business Succession.’

Click here to buy your copy of “Your Business Succession”

Here’s to your Profitable Business Exit!

Leigh Riley

Business Succession Strategy Weaknesses

In a previous series on why too many business owners fail to exit their business with maximum cash flow and profits, I identified 8 business exit strategy weaknesses which may cause a disappointing business succession outcome for you.

The previous post in this series revealed why you want to move from the Unilateral Zone to the Three Dimensional Zone Of Value™ in your business to boost your business exit cash flow and profits and this post demonstrates that transparent terms of sale can seal the deal for a favorable business exit.

How Transparent Terms Of Sale Can Seal The Deal For A Favorable Business Exit – Case Study

Chemical manufacturer, Christopher, wanted to retire from his business, which produced manufactured products and cleaning goods using protected formulas.

He easily attracted an interested buyer due to the financial data he was able to provide. However, the contract sale terms were terminated when it became clear to the buyer that the chemical formulas were not clearly documented, and Christopher was not willing to provide these in a written format with a manual.

The buyer lost faith due to the seller’s lack of transparency, and abandoned the sale.

This was a wake up call for Christopher and he finally agreed to provide the documentation, but the buyer no longer wished to proceed with the transaction, because he now believed that Christopher was less than honorable.

As you read this case study, it may seem very obvious to you how this problem could have been avoided. However, as was the case with Christopher, too many business owners are unaware of how their actions (or lack of action) can affect their business exit until it is too late.

So I can’t emphasize strongly enough how important it is for you to be transparent and to document clearly exactly what you intend to include in the sale of your business as you prepare to exit.

How to document your business processes is discussed in more detail in my book, Your Business Succession: How To Exit Your Business For Maximum Cash Flow And Profit with specific solutions to Christopher’s business exit problem in Part 5.

How well prepared are you to exit your business with maximum cash flow and profits? Take the FREE Business Exit Quiz (only 5 minutes) and find out exactly where your business succession strategy may be letting you down, and how to improve your chances of exiting your business for maximum profits and cash flow.

To Your Profitable Business Exit,
Leigh Riley

Previous article in series | Next article in series

Business Succession Strategy Weaknesses

In a previous series on why too many business owners fail to exit their business with maximum cash flow and profits, I identified 8 business exit strategy weaknesses that may contribute to a disappointing business succession outcome for you.

My last post pointed out the pitfalls of failing to value your business properly, and this post explains why you want to move your business from the Unilateral Zone of Value™ to the Three Dimensional Zone of Value™ so that your business will have the highest possible valuation at the time of succession.

Why You Want To Move From The Unilateral Zone To The ‘Three Dimensional Zone Of Value’™ In Your Business – Case Study

Fritz was the successful owner of a car dealership that he had operated for more than 20 years. He proudly conveyed that the primary value in his business was his own personality and ability to develop relationships. He was resolved that he was the sole reason for the business success and he knew when the time arrived for him to leave, he would have nothing to sell other than stock, the premises, office equipment, and other goods and chattels.

Fritz admitted to having no formal arrangements with customers and suppliers, who continued their association simply because they liked to deal with him. He considered his staff to be mere instruments for backing him up in the operation, because they added no value to his business turnover or efficiencies without his specific instructions.

Fritz’s biggest complaint about having a business was that he could not get enough time away from it to relax and enjoy some of his success. This is a classic example of a business operating in the ‘Unilateral Zone of Value™’.

This example demonstrates a business strategy problem, but it also is representative of a case with leadership, management, contingency and continuity problems.

Obviously Fritz needs to develop his car dealership from the ‘Unilateral Zone of Value™’ into the ‘Three Dimensional Zone of Value™’ if he wants to increase the business value, and therefore the selling price at the time of exit, which could occur either at a time of his choice, or by circumstances beyond his control.

How to build your business value to the Three Dimensional Zone of Value™ is discussed in more detail throughout my book, Your Business Succession: How To Exit Your Business For Maximum Cash Flow And Profit with specific solutions to Fritz’s predicament in Part 5.

How well prepared are you to exit your business with maximum cash flow and profits?

Take the FREE Business Exit Quiz (5 minutes of your time) and find out where your business succession strategy may be letting you down, and how to improve your chances of building a business for maximum profits and cash flow

To Your Profitable Business Exit,
Leigh Riley

Previous article in series | Next article in series

Business Succession Strategy Weaknesses

In a previous series on why too many business owners fail to exit their business with maximum cash flow and profits, I identified 8 business exit strategy weaknesses that may contribute to a disappointing business succession outcome for you.

Failing to properly value your business was one of those weaknesses, and is the subject of this real life business succession case study.

The Effects Of Failing To Properly Value Your Business – Case Study

A sole director (Dave) was nearing retirement and recognized that a talented, key income-generating employee (Pete) would be an ideal candidate to take over the business.

Dave gave Pete 20% of the company without Pete paying any financial consideration, as incentive to retain him. Pete was delighted to enter into a buyout agreement set up by Dave’s accountant to acquire the further 80% over four years .

Dave based the valuation of his business on his own estimations, as he did not believe it was worth paying the accounting fee for a proper valuation.

Later, while Pete was honeymooning overseas with his new wife, Elise, he died in an accident. Elise, being well advised, arranged a business valuation and made a claim on Dave for her share of the business that she now rightfully owned as Pete’s sole beneficiary.

Dave didn’t think he should pay Elise anything, because Pete didn’t pay for the shares. What’s more, Dave was surprised to learn his business valuation was higher than he thought, so he had given away much more than he had estimated.

Unfortunately for Dave, the legal opinion was that Elise was entitled to due payment for the full amount of the valuation. Dave had to go into debt to pay Elise, significantly delaying his retirement until the debt was cleared.

This case demonstrates a strategy problem in Dave’s succession plan – while he recognised the value in arranging a succession plan, he had failed to obtain a formal business valuation, which let his entire exit strategy down. It also reveals the impact of overlooking other common areas of business failure, such as contingency and continuity problems, which are identified and discussed in detail in Part 5 of my book Your Business Succession: How To Enter, Execute And Exit Your Business For Maximum Cash Flow And Profit.

How well prepared are you to exit your business with maximum cash flow and profits? Take the FREE Business Exit Quiz (5 minutes of your time) and find out where your business succession strategy may be letting you down, so you can learn how to improve your chances of building a business for maximum profits and cash flow and profit.

To Your Profitable Business Exit,
Leigh Riley

Previous article in series | Next article in series