More and more women are starting businesses – accounting for round a third of UK business owners – but since they are more likely to step away from the business than men, succession planning should be high on their agenda.
The statistics speak for themselves – Female entrepreneurs are more likely than their male peers to step away from a business for personal and familial reasons; the demands of parenthood, a personal or family illness, a change in broader domestic circumstances.
It’s not all bad though, while a study by Harvard Business Review found that when the entrepreneur was female, the probability of exit for personal reasons increased by 15%, the probability of actual failure was reduced by 13%!
None the less, as a female business owner, to successfully plan for your personal future, it is always wise to take into consideration the future of your business.
As financial planners, FPC understands the life commitment and personal sacrifices you may have made to build your business and how important it is to protect that legacy and those who may rely on it for financial security. Of equal importance is time and consideration to prepare for the psychological and emotional challenge that inevitably comes with a decision to exit and/or to sell
So, what precautionary steps can you take to ensure that your succession planning is executed successfully?
Get started early
Life often presents people with unexpected obstacles. While you can’t prevent the unknown, you can still curate a plan well in advance. Early planning can help ensure the maximum value is secured for your business, as well as reducing the emotional stress that goes with the decision to exit. Enlisting a trusted financial planner can help you identify a clear plan, enabling full insight and understanding of your position and also help prepare you for the practical and psychological challenges involved in planning for succession.
Flexibility is key
Since regulations are constantly changing, as are personal circumstances, nothing will be concrete. However, devising a clear strategy with an experienced financial planner will increase the effectiveness of your succession plan. By focusing on a general plan, you can manage risk, costs, and tax burdens on income and investments in a predictable way that will enable you to live a life of financial stability.
Explore your options
Don’t put yourself or your business in a box. Everybody has their own goals, perhaps yours is to appoint a successor or maybe you’d rather sell. Either way, it’s best to keep an open mind and explore every available outcome for the smoothest transition possible. FPC has helped a variety of clients with succession plans, each with a unique situation that required all options to be explored before making a final decision – this ensures clients remain in control throughout the process. Evaluating the different options means you can rest assured you did everything possible to achieve the best financial result for your business and yourself.
Communicate
As a business owner you will not only have spent years building a thriving business, but throughout the years also built strong relationships with your colleagues. While it might not come as a surprise to your colleagues that you’re exiting your business, they will want as much clarity as possible. Consequently, it can be highly beneficial to talk to those who have helped you build a reputable company as they may be eligible candidates for succession, or if you decide selling is a better financial decision for everyone, they will need to be onboard. Involving all stakeholders allows you, and them, to make an informed decision alongside the professional advice of a financial planner.
The art of letting go
The hardest part is making the decision that it is time to let go. Many believe that exiting a business is the end of an era, but it certainly doesn’t have to be. FPC asks clients to view a succession plan as stage two of the business’ expansion, it is the next opportunity to elevate and grow a company. And it can open doors for your own personal financial growth too.
Planning to exit from a business and doing it successfully is one of the most challenging transitions that FPC helps clients deal with, but with over 40 years of experience, FPC is well equipped to ensure clients receive the financial clarity they deserve.
