As a growth investor, I am fortunate to spend most of my days with SME business owners. One of the most common business challenges I see them facing is succession and retirement.
Succession has become a major issue for SME businesses in Australia, particularly as the baby boomer generation prepare to exit their companies over the coming years.
Australia is at a demographic tipping point
Baby boomers are currently aged between 54 and 74 years of age, with the weighting heavily towards the top of the range. A large number of these baby boomer SME business owners are expected to exit their business over the next 10 years. However, the latest survey data available indicates that around 75% of business owners have no exit strategy.
This is certainly consistent with what I see at Pemba – with many SME owners putting most of their efforts into building the business with very little thought given to planning for succession.
Losing your heir?
Many SME businesses ignore the issue of succession, believing that their children or family members will provide the solution to their exit aspirations. Unfortunately, the current millennial generation seem to want to carve their own paths and often have little interest in following in their parents’ footsteps and taking over the family enterprise.
What is a succession plan?
Succession planning involves making decisions about who will lead your business into the future, and who will take ownership of it. If you develop a good succession plan, you can transition out of your business more easily. This can help to take the business forward to the next stage and leave a successful personal legacy.
How we can help?
At Pemba, we work closely with business owners to help them plan ahead and achieve their desired exit outcomes. We spend a lot of time working with business owners to design the best strategy to maximise the company’s value and achieve a successful exit for all shareholders.
For us, exit and succession planning is about working with the SME owner to determine how best we meet their specific personal objectives. Whether it’s transitioning away from the day-to-day operations to a more strategic role or full retirement, we can help business owners maintain control over how and when they leave the business and ensure this is always on their terms.
Are you a business owner grappling with the challenge of succession? If so, please contact us and we will be happy to share how we can help you implement an appropriate exit strategy or succession plan in order to achieve your desired exit outcome.