The reason that most business owners don’t have a succession plan is that they don’t know where to start. Ascend Business partners have developed a systematic approach, called the “Seven Steps to REFIRE”, to work with business owners to increase the value of their business and improve their profits. This allows them to exit their business with a valuable asset they can sell, transition to the next generation, or provide them with an ongoing passive income.
In this blog we share the first of the seven steps– Business Readiness
Where is your business at today in terms of value, profitability and operational efficiency? Knowing the value of your business is an important step in understanding how it contributes to your overall wealth and will determine if you in fact have a “wealth gap”. An extensive review of the key business value drivers, and operational factors, will provide insight into what can be done to increase the value of your business. This step also reviews your business structures to ensure they are appropriate for your longer term exit strategy, and assesses how attractive the business is for future sale or ownership transition
Your business as an asset to generate wealth
There are three primary ways you can build your wealth: Property, Shares and Business. Most people are aware of the strategies to build wealth through property investment, and this has been very lucrative for many people in the last 20 years. Most Financial Planners will assist their clients to make investments in the stock market, where returns over the long term can assist your wealth creation. Owning your own business, or part thereof, is another great way to build your wealth.
Take Creel Price for example. Creel in co-founded Blueprint Management Group at the age of 25 with just $10,000 in capital and sold it within a decade for over $100 million. Whilst this is an extreme example it goes to show what can be achieved by creating a perspective about building a valuable, saleable business rather than just a business to provide an income.
There are many of business owners who see their business as a form of income rather than an asset. By taking a long term view about your wealth goals, and then determining what role your business plays in generating this wealth you can create a plan that will give you the greatest chance of success. For many business owners taking this approach will create a different perspective on your business and help inform the strategies that will build your wealth. For example when you set your strategic goals are you setting financial targets based mainly on sales and net profit? Whilst important in the context of generating income and value it is important to set some financial goals around the value of the business, particularly to the extent that this contributes to your future wealth.
Why leave the future of your business to chance?
To find out how to create the ideal exit strategy designed to meet your personal needs choose one of the following easy options:
Photo Cred: Yaser Ali Law