Do you know your number?
How much do you need and when to live the life you want?
Every successful business has a robust business plan, but what plans have you made for your own financial future? If you are a successful business owner, you probably spend most of your time looking after your business and not enough time considering your own interests.
For example, would you be able to answer these questions?
- Are your assets managed as well as they could be – are your investments, pensions, properties and savings going to make a real difference to your future income?
- Do you measure the returns you achieve (net of fees) compared to the returns you need each year, just like you do in your business?
- Do you know how much you need to extract from your business at your point of exit, to live the life you want?
- What is your business actually worth to you?
- Do you know how to extract the value out of your business in the most tax-efficient way?
If you can’t answer with clarity, we’d invite you to have a chat with Gary Neild, our founder and CEO. He knows first-hand what it’s like to build, manage and deliver a succession plan for a business. Learn more about our move to an EOT here.
Making business assets work harder
So many businesses have money sat on deposit earning no interest and paying high fees to their banks. At Blue Sky, we offer a range of services to help business owners optimise returns on capital.
- Would you like to achieve a net return on your deposit money of over 4.5% with just a 10-day notice period for withdrawals and no exit fees?
- Have you considered investing some of your business capital and benefitting from compound returns?
- Have you ever thought that the money you make on business capital could be used to invest efficiently into executive pensions?
We work with numerous businesses across Dorset and beyond and have created significant wealth for them via our bespoke strategies. We help clients, just like you, look at the full picture – business and personal – and build strategies to meet both collective and individual goals.
Managing risks
We know you are an expert in running your business and know your sector inside out. Business owners are generally very good at managing risk within their businesses, but they are not always as good at managing peripheral risk. A large proportion of businesses are woefully underinsured, as are their key people.
We firmly believe and advocate the importance of being in control as much as possible.
- Is your company protected should key people be unable to fulfil their roles?
- Does the level of shareholder protection you have in place match the current value of the company?
- Do you share our view that building a business without adequate protection is like building on quicksand?
Succession planning for business owners
Running a business can be very rewarding, but it can also be a tough gig. Delivering a succession plan, many would argue, is even tougher. Get it right and you are paid a good price for your life’s work. Get it wrong and all that you have built may dissipate before your eyes and you may end up with less than the real market value for your business.
As a business owner who personally had to evaluate the options for succession and decide what was right for my company, our CEO Gary Neild is well placed to help steer business owners towards making the right choices.
It’s payback time
However we dress it up, when you relinquish the ownership of the business, it’s payback time. A reward for keeping the business alive and kicking. A reward for the risks you’ve had to take and a reward for your adaptability in ensuring that the business is still relevant.
Most businesses fail – but yours hasn’t. You’ve got the skills and the knowledge to run your business effectively. Delivering a viable succession plan though is likely to be something you’ve never encountered before. Nothing really prepares you for the difficult decisions that lie ahead.
A multitude of risks await
If your motivation is entirely about the capital you are going to enjoy as a result of a sale, in some ways, it makes succession planning easy. You are not bothered about your legacy. You may not want any involvement and will be willing to walk away as soon as possible. Seems quite straightforward, but this approach is littered with risks because you’ll have little control should part of the sale proceeds be paid in instalments.
On the opposite end of the spectrum, you may love what you do but feel it’s prudent to transition your business to your next phase. Finding an owner who still requires your active involvement can prove tough as you enter a new paradigm. So many in this situation end up leaving the business before the end of their earn out period, at a financial cost to themselves.
A hybrid approach may be possible
Gifting your company into an Employee Ownership Trust is becoming more popular but, it has still only been utilised by a few thousand companies since the legislation was introduced in 2014. This is how Blue Sky operates and has done since December 2022 – Gary’s succession plan of choice.
So, what are you going to do about your future?
It’s never too early to plan and be aware of the possibilities. It’s important to understand the options for your business first and foremost. A lot of time and effort can be wasted here very easily.
The next step is to ‘know your number’. How much do you personally need and when, to live the life you want, with confidence? Too many business owners anchor on the best figure that has ever been banded about, or the sale figure someone else got for their business a few years back. Change is happening quickly and the valuation of a company is never a fixed price.
Instead of anchoring on a fictitious business valuation, it’s essential to understand your own personal financials as this allows you to evaluate your tolerances. How much is enough? What do the tax implications look like? Having this information in your back pocket is invaluable when it comes to negotiating an exit.
Getting your business ‘fit for purpose’
Understanding what is required for a business sale, a buy-out or a move towards employee ownership is key. You must know the answers to questions and requests and support these with evidence. Think loosely of going into the “Dragon’s Den”. If you don’t know your numbers and you can’t back up what you are saying, you are going to get less money for your business and maybe, none at all.
Let’s Talk
A free consultation is available for business owners and directors to discuss what they want to achieve.
A short report will be provided following the meeting setting out the likely options for succession.
Then, should you choose to work with us, we create an individual financial planning evaluation for those owners and directors who are selling part or all of the business. This is extremely important before getting into deeper financial discussions about any succession planning for your business.
Depending upon the landscape, we then work with a specialist who is committed to delivering a successful sale or transition within 6 months.
If you would like to learn more about our services or wish to have a free consultation with Gary then please call 01202 756560.
