Situation:

Matt was a sole director of a thriving manufacturing company. His wife Harriet held a senior position in the company; however, she had no sign-off rights to any of the business accounts. When Matt had a stroke and fell unconscious for three months the accounts of the business were inaccessible. Although payments were being received and banked from fulfilled orders, no authorisation was available to make payment of staff wages or to suppliers for new materials.

Implications for their Business:

• Harriet attempted to obtain credit from suppliers and bankers to alleviate the cash flow crisis, however this was not easily reached due to the uncertainty of Matt’s condition and her own ability to secure a credit application
• Some staff were patient and continued to work regardless, however the reality of their own personal cash flow pinch soon resulted in them having to find work for payment
• Rapid consumption of materials meant the company’s ability for production was substantially impeded
• Customers were soon forced to order from competitors due to the lack of production.

Harriet’s application to the courts to gain authorisation to access the business accounts was long, involved, tedious and stressful. The business suffered a significant downturn and took a long time to recover.

Solution:

The matter of Matt and Harriet would never have been a problem had they received the right guidance from their advisors to arrange an enduring power of attorney (EPA). An EPA would’ve allowed a trusted person to authorise payments on Matt’s behalf so that the business could have continued to operate as smoothly as possible, at least from a cash flow perspective.

Here’s To Your Profitable Exit!

Leigh Riley

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Businesses: 6% Will Close Without Selling (ATO)

In Australia, that equates to about 120,000 businesses a year that do not sell, with owners simply closing their doors.  Alarmingly, this statistic is rising due to the large amount of businesses that are not adequately prepared for the issues they will face when the time comes to leave.  They haven’t built their business as a valuable asset with a Business Selling Strategy.  Escaping these statistics is easier than you may think.

75% Have No Succession Plan

The 3 top reasons business owners like yourself state as why they haven’t implemented a formal exit strategy is because

• they’re so busy working ‘in’ their business, they’ve failed to take stock and spend time working ‘on’ their business;
• they think it’s too hard and allow seemingly more pressing everyday tasks to take priority, ultimately losing focus of the big picture for their business with a business selling strategy;
• they don’t see the immediate need, particularly if they feel it will be some years before they wish to retire from their business

The Number of Business Owner’s that will Leave Due to Unplanned Circumstances is 51%

Business owners always believe they will choose the time when they will leave…..but in doing so, they lose control when they overlook the 6 Succession Triggers and fail to understand that only 2 of these can be controlled.  The other 4 exit triggers will adversely affect them, impacting heavily on their financial outcome when they exit from their business.  It doesn’t have to be that way.

How Do You Escape and Overcome the Succession Statistics?

I can’t cover all the ways for you here in a short blog post, but I can share a lot more techniques in the books, and also in a FREE Webinar.  If you are serious about your business direction, have a goal for the way you see it developing as a valuable asset that you can one day sell, you can’t afford to miss the opportunity.  Sign up for the FREE Webinar to learn how! You can do this by emailing your interest to my office at support@ybsprofits.com  or  call 1300 499 225 or (03) 9584 5099 to book your place. The session will be on 21 June 2011 and they will run in two timeslots, 2pm or 7pm for 45 minutes each.

Here’s to Your Profitable Exit Strategy!

Leigh Riley

Business Exit Is Not Always A Planned Strategy

As a business owner you have already discovered that events beyond your control are likely to bring unexpected surprises / shocks that can have a profound impact on your business cash flow and profit.

Multiple factors contribute to your business success in both the long and the short term, and while some of these factors may be beyond your control, just as many success factors are within your control, but are often overlooked.

Unplanned events that have the potential to annihilate the future profitability of your business are often related to your unexpected exit from your business, triggering a business succession scenario. While these events may not be planned, expert business exit preparation can  allow you to minimize unfavorable consequences of unexpected life and business events.

6 Business Succession Triggers

Even with a business succession plan, the impact of an unexpected owner departure can be just as disruptive as having no business exit strategy. So you want to make sure that your exit plan covers these 6 succession triggers, most of which are due to unplanned events:

1. Death
2. Disability
3. Dispute
4. Divorce
5. Departure due to retirement
6. Desire for difference

This is the first post in a series in which I will cover each of the succession triggers in more detail. While you are waiting for the next post you can click the link to take the FREE business succession quiz to assess how well prepared you are right now to exit your business with maximum cash flow and profit.

Have you or a family member or friend ever experienced one or more of these succession triggers? I invite you to share your wisdom and experience in the comments box below.

To Your Profitable Business Succession,
Leigh Riley

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