The issue of succession planning, or how am I going to get out of this business, to my advantage, is continuing to be a challenge for operators of small to medium enterprises throughout Australia. Research by KPMG indicates that 70% of small business operators want a succession plan but don’t have one. This situation is compounded by the fact that, due to the preponderance of baby boomers in the current population, 50% of small business operators are likely to want to retire within the next ten years.
The succession planning issue is of greater importance to the north west coast of Tasmania because we could be known as the small business capital of Australia. Almost 90% of businesses in this region employ under 10 people, with 75% of these employing under 5 people – we have a lot of small businesses!
When people think of succession planning, they often think of accountants, lawyers, financial planners, superannuation, family trusts and, ‘who can I get to run this business so I can retire?”
Our experience is that small business operators have very little idea as to how to approach the whole issue of succession planning. For those who seek advice from their accountant regarding this issue are likely to receive tax advice and very little else; those who seek advice from their lawyer will receive asset protection advice and very else; and those who seek advice from their financial planner will receive wealth creation advice – very little else. What really is required is advice from all three so the issue becomes not which adviser to see but how do I coordinate the advice from all three?
Whilst the input from professional advisers is important, what is more important is that the business owner and relevant family and other interested parties have the opportunity to express a point of view and preferences as to their involvement (or no involvement) in the future of the business. This is the best point to start and can be assisted by the use of facilitator who is experienced in this area - particularly facilitation. It is important here to make the difference between facilitation on the one hand and, financial, legal or tax advice on the other.