Tag: nature

Business Succession Planning

One day you will have to leave your business – whether its because you retire, you pass the business on to your family, you sell it to an interested party, or because of health circumstances.

Whatever those circumstances are, you always should have a plan to deal with what happens when that day comes. A failure to do so will likely result in your business suddenly coming to an end if something happens to you.

A succession, or exit, plan outlines who will take over your business when you leave or if something happens to you.

A good succession plan puts into place a process that will enable a smooth transition from you to your successor, that minimises disruptions to your business resulting from that transition. A good succession plan also gives potential purchasers peace of mind that the business will not fail the moment you leave. Putting a succession plan in place can maximise the value of your business and enable it to meet future needs or deal with unexpected issues.

What an appropriate plan is will depend on the nature of your business as well as the structure of your business. Some of the questions that you will have to ask are:

  • How long do I want to be in business?
  • Do I want to sell the business eventually or do I want to hand it down to my children?
  • What business structure does my business operate in?
  • What are the assets and liabilities in my business? Who owns them?
  • What is the goodwill and intellectual property in my business? Who owns them?
  • How big is my business?
  • Who can run my business if I am not around?
  • Do I have any processes or procedures for my employees to follow, so that if something happens they can act “automatically”?
  • If I were to sell my business, do I have a handover strategy?

If anything, see your business coach, accountant, or lawyer – they can certainly help you out in relation to identifying these issues and assisting you with your business succession plan.

A good succession plan enables a smooth transition with less likelihood of disruption to operations. By planning your exit well in advance you can maximise the value of your business and enable it to meet future needs.

Dealing with Bad Debt

Managing and dealing with your cash flow is very important for anyone in business, but a failure to manage bad debts may be highly damaging to a small business. As a small business, you must be always mindful of this situation, especially in the current economic climate.

Unfortunately in the current economic climate, bad debts and commercial disputes become all too common. Most people are quick to rush off to see a debt collector, or a solicitor, however the problem with taking legal action is that doing so may be costly and time consuming. Before taking such a path, you should review and assess:

  • If you have a clear, straightforward, and strong case
  • If you do not have a clear case, if you need to obtain legal advice to consider your position
  • If the matter can be negotiated and resolved
  • If an lower value offer is made, is it reasonable to accept it rather than to start legal proceedings

Court isn’t necessarily the first place to go to resolve a dispute. Rather, it should be considered the last place to go. The court system is often, slow, procedural, adversarial in nature, inflexible, and costly. There is also the risk that you may lose the case and be subject to paying the costs of defending the case.

The last thing you have to take into consideration is the capacity of the debtor to pay. There is no point in wasting both time and money taking action and enforcement against a debtor who cannot pay.