100,000 Queensland business owners set to retire.
If you own a Queensland based business and are looking to retire this year or next you need to take immediate action. It probably doesn't come as a surprise to hear that many of your peers are also thinking of exiting / or selling their business over the next few years. Recent research by Xero (accounting software provider) indicates that around 25% of all business owners will attempt to retire this decade. That's more than 100,000 business owners all trying to sell at the same time!
Source: Xero - Success through succession planning.
With so many business owners planning on selling their business it is accurate to say that there will be more than double the historical average number of businesses for sale over the coming years.
So what does this mean for you as a vendor?
1. Increased competition for buyer attention.
2. Less leverage in the negotiation process.
3. Reduced valuations.
4. An increased likelihood of not selling.
5. The prospect of not being able to fund your retirement from the sale of the business.
What can you do to mitigate against these imposing trends?
The number one strategy we recommend is to firstly develop a detailed exit plan. You have probably all heard the adage, if you fail to plan then you plan to fail?, well this rings especially true when it comes to the complex matter of exiting your business.
A professionally prepared exit plan will critically evaluate your business in its current form and identify those areas of your business which are likely to make your business more difficult to exit or sell and identify those areas of your business which buyers find the most attractive. An exit plan will also start you thinking about just who is likely to pay the most for your business or who you want to take the reigns once your gone.
Ultimately a good exit plan will help to identify the risks, growth opportunities, timeline and most appropriate exit strategy and then use this information to formulate a clear strategy and list of action items / projects to be undertaken in order to optimise your readiness for exit.
By optimise i mean,
1. Mitigate the risks to future cash flows;
2. Make the business more attractive to a strategic acquirer; and
3. Increase the valuation.
Check out our website bspstrategic.com.au if you would like to learn more and download our guide entitled "10 Strategies to prepare your business for sale". The guide provides useful strategies that you can easily implement to help increase your prospects of a successful exit.