News Articles
22 October 2022
In many cases, a business represents the owners' 'nest egg' for retirement. Therefore, creating a sustainable and profitable business will help you maximise its value and help secure you and your family's financial future.
So, what are some of the things to consider in maximising and protecting the value of your business?
In a potential business sale, a purchaser will conduct a due diligence review that will look at the numbers to determine the value of the business and review business operations to assess whether they can enter the business and operate it successfully.
Over-reliance on individuals or management could affect the valuation. Thought needs to be made to engage the next generation of leaders within your business and find opportunities to empower them with ownership of essential tasks and projects. The development of your team will help build capacity for management and ownership to focus their efforts on other value-add areas to foster business growth.
Implementing a mentoring and skill retention strategy to help provide an environment where your leaders are supported and encouraged to become the best they can be.
Beyond the financial performance of your business, ensuring processes and measures are in place to allow for prudent financial control is vital. Monthly management reporting will help identify trends and strategies to improve margins and profitability. A detailed understanding of your business segments will help identify areas of strength or identify critical areas for improvement – this should underpin your business strategy. Tracking actual performance against a thorough budget allows you to measure performance against expectations and identify abnormal items or unexpected deviations.
Once you have established a valuable business, the following safeguards can help protect it.
Conduct an insurance review to determine whether you hold adequate insurance for:
Ensure that you have sufficient agreements in place to help navigate shareholder or business partner disputes or disagreements. For example, obtain advice regarding the documentation of a succession agreement to ensure that if there is an unforeseen death or incapacitation of a business owner, there is a plan to move forward as best as possible (i.e. protecting family and remaining business owners).
Wealth Plan
Review your wealth plan holistically with your financial adviser to confirm that investment assets are sufficiently separated from business risks and that trading entities' cash reserves and retained earnings are strategically managed.
Maximising the value of your business and protecting it can be workshopped in a strategic planning session and subsequently executed and monitored over several years.
Discuss Further?
If you would like to discuss, please get in touch.
Disclaimer
The information provided here does not constitute advice. The information is of a general nature only and does not take into account your individual situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.
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We acknowledge the Traditional Owners of the land where we work and live. We pay our respects to Elders past, present and emerging. We celebrate the stories, culture and traditions of Aboriginal and Torres Strait Islander Elders of all communities who also work and live on this land.
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HINDMARSH SA 5007
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Welland SA 5007
"We feel confident in our financial decisions and can focus on growing our business with peace of mind."
John & Barbara Kalleske
Kalleske Vineyards Pty Ltd
