Business Evolution is about building, retaining and passing on your wealth from generation to generation. It involves recognising and dealing with many complex family, individual and business issues such as clarifying your goals, management succession, estate planning, taxation and wealth management. Working through the Business Evolution process may point to realising the best possible value for your business, but this depends on your individual needs and circumstances and can be determined once your goals have been established.
Every business is unique and the optimum outcome for each one will vary. From the beginning it is important to establish and maintain a clear focus on the core goals and outcomes sought. For example, do you want to pass the business to your children? What income do you need to retire? Often attention shifts to taxation, financial and legal issues, ignoring why you started the process in the first place! This is why, before you commit yourself to the process, you need to understand and clearly articulate what is truly important to you.
Importance of Family
The most important and complex matters that you will need to deal with in the Business Evolution process concern your family. This is an area that requires careful consideration and consultation. You will need to draw on all your leadership skills to guide them through the process, dealing with the personal issues and working with your Advisors. Matters to consider include how to manage, control and divide the wealth. How can you maintain family unity, and how do you resolve disputes? Ultimately the success of the family in growing its wealth and strength from generation to generation will depend solely on the commitment of each individual in the family. The key to your success in the Business Evolution process lies in identifying the needs of each individual and satisfying those needs.
Where Is Your Wealth?
You will need to map your wealth, including the business and other investments that you may have accumulated over the years. Then you need to consider in what form and when these assets may be transferred, and to whom. Do you want to pass on shares in your companies or cash? Will any consideration be payable for the shares? How will you ensure your own ongoing financial independence? Answering these and other questions will result in a summary of your wealth and how you wish it to be allocated.
Continued Success of Your Business
The Business Evolution process revolves around continuity and value. Addressing both of these
issues will ensure that the process underpins and builds the ongoing success and growth of the business and its capital value. At this stage you need to decide what is best for your business. Options include selling the company to a third party or management, retaining ownership but appointing a CEO, or appointing a family member to run the business.
Preparing for the sale or change in management requires time to build value, assess likely successors, consider options and achieve the best possible outcome. Indeed, a timeframe of 3 to 5 years is not uncommon. You will also need to develop a strategic business plan which will form a key guide to the value of your business. In addition, a business value assessment will identify where the capital value lies in your business and how that value may be enhanced.
You may have spent a lifetime building your business, developing key relationships, working within your community and for the benefit of your family. As part of the Business Evolution process, you may wish to consider the legacy that you wish to leave, such as something that you are known for, a way that you wish to give back to society or something that you have always wanted to do.
Choosing Your Advisor
It is important to identify and engage a suitable Advisor early in the process, ideally someone with both professional expertise and the life experience necessary to guide you through the process. Your Advisor must be someone you can work comfortably with, use as a sounding board, and trust to help turn your plan into reality. To support you, your Advisor will need to be able to draw on a broad range of skills and in-depth knowledge including business strategy, finance, estate planning, management succession, investment strategies and taxation.
People are sometimes puzzled when they look back and wonder why they have not achieved what they had hoped. Often, on reflection, they realise that they really didn't know where they wanted to go in the first place and that their goal posts kept shifting from year to year. You can avoid your Business Evolution plans failing or losing direction by working with your Advisor to draw a plan to capture your thinking and guide your actions.