Blog: Top tips for future-proofing your business
Succession planning was always a hot topic when markets were buoyant and businesses were optimistic. However, the recession meant many owners put this forward planning on hold, even in the construction sector, which boasts a high number of owner-managed and family businesses.
However, recent research carried out by Scott-Moncrieff found that, as the ‘new normal’ is bedding in, the topic of succession is seeing a resurgence in popularity.
The firm’s latest annual UK-wide report, ‘Strength amidst uncertainty in 2017: The SME view’, finds that almost a third (29% in the UK and 31% in Scotland) of SMEs are certain or very likely to review their succession plans over the course of this year. However, given that succession planning hasn’t been a priority of late, many may not be aware of the full range of options available.
Encouraged by the latest results, Marc Shenken, a partner at the business advisory and accountancy firm, sets out the key things construction business owners should think about when planning for the future. He emphasizes that it’s vital to think early on about what type of exit you want to achieve and, if selling your business, who you want to sell it to.
Failure to plan could not only reduce the potential value of a business, but could lead to a loss of advantageous tax reliefs and expose owners to unnecessary risks.
According to Marc, top tips to plan for the future of your business include:
Understand and verify what your business is worth
If you’re favouring a sale and exit from the business, you should gain an idea of how potential purchasers may value your business. Alternatively, if you are planning to pass the business on to the next generation, a valuation will help you determine the likely value of this gift and to plan accordingly.
Get tax advice
You could miss out on valuable tax reliefs simply by failing to plan in good time, or by making minor changes to your business. Tax planning does not always cease when you sell or hand on your business, so you may need to consider how you invest or protect any cash proceeds in a tax-efficient manner. Where possible, take advice from tax planning and wealth management specialists.
Don’t hand over any baggage
Settling any disputes with suppliers, customers, employees or HMRC is vital to ensuring your business is in the best position to be sold, gifted or wound up in a timely and efficient manner. Gaps in the management team should be addressed, and you should make sure that your accounting and tax records are in good order.
Keep your corporate structure simple
Corporate simplification planning provides vendors with the comfort that no outstanding risks or liabilities remain, and can also significantly increase the value and attractiveness of your business.
Planning for the future has, of late, been a luxury that most could ill afford. However, for those directors or owners that have come through difficult times and now resolved to stand back, get out or move aside to let the next generation take things forward, there are many options available. While there are a variety of things we might not be able to predict at the moment, planning the future of your business is one area where you can take some control.