Stepping back from your business
When’s the right time?
I hope you’re not expecting me to have all the answers?!
Of course the real answer is that it depends on so many factors. What I hope to be able to do with clients is to look how those factors interplay, work out what the priorities are, find out if and where there are blockers, and work out how to get past obstacles.
In the past few months, I’ve been having a whole range of conversations with clients and their advisers, and these are some of the things I’m hearing.
Tax. This can either be a catalyst for taking action now, maybe there’s a tax change coming which will be less favourable than now (the Budget is definitely a factor here), or it can be a drag on change, for example if the tax on exit is perceived to be penalising or prohibitive. Proactive succession planning usually involves tax considerations in one way or another, but in my experience I’d say that whilst tax is often a large factor, it shouldn’t be the main driver in decision-making.
Is the business ready to be without you? There are some big questions here – who is going to take over from you? Is there succession planning within the business, or is it going to be sold? Is it sale ready? Who might buy it and are you comfortable they’ll take over in the way you would want? Are family members taking over and are they ready? How do the family dynamics work and is everything harmonious?
Are you ready to be without the business? What are you going to do in the future? Do you want to still have some input or are you ready for a clean break? Are you worried about life after business? Is your identity tied up in the business and you are worried about how to find “your purpose” after your role changes? How are you feeling about handing over control?
Health. I see two common themes here. The first is a health challenge for the business owner or immediate family member which means they are forced to take a step back. That might be an acute condition, for example a heart attack or cancer diagnosis, or a more chronic condition, for example dementia. The second is where the business owner sees people around them being impacted by health problems and it makes them question what they want for the rest of their lives.
Finances. Do you understand what your finances will look like after you exit? What does your asset base look like and how will you generate income? Have you got the right advisers in place given that your income and capital might be very different to what you are familiar with.
Time. Whilst I am not a psychologist, working alongside individuals and families over many years has given me insight into how people change over time. I’m no different. We can sometimes feel that we are springboarding forward whereas other times we might feel we are treading water or even going backwards. Some people acknowledge they are just fearful of change whereas others might have a blocker which they need to understand and then navigate past.
At the heart of Succeeding Well and the work I do with clients is my belief that the only way that succession planning works, for everyone concerned, is if we really make an effort to understand people and what is important to them. The best tax, financial and legal planning could be in place, and it might still be a disaster for the individuals concerned.
I am able to take time to understand how people feel, what is really going on for them, and what is going to work best for them and their families.
I’d love to hear from you if you’d like to explore a bit more about your own planning, or if you’re an adviser working with a client(s) and think they’d benefit from some time to explore what is important to them, and what might be holding them back.
