Viewpoints
Maximising people's potential will maximise your business potential
Exit planning
By Amanda Chase
By Kevin Vincent
The most important resource's any business will ever have are its people.
Exit planning refers to the process of helping the business owner(s) leave or exit the business and ensures that a successful transition of ownership will transpire in a timely, efficient and effective manner.
This means; one of the most important investments you will make will be in the processes around finding and managing the right people. Which is where HR comes in. 'Managing' not only means KPIs and making sure your team reach their targets or quotas for the month, it more importantly means empowering, coaching and motivating your staff to share your business’ vision. This will, in return, increase their determination to do well and help the business they work for do well also. When your staff understand the reasons why they do what they do and how it affects the bigger picture, they are more likely to feel like an essential part of the business. By investing in good human resource practices and helping your people grow, you will be directly impacting the business' success. When leaders tell people to do their jobs, they get workers, but when they trust people to get the job done, they get leaders. There are multiple areas that benefit from having good HR practices in your business. Some of these include:
• Your staff will build your reputation as an employer of choice • You will build a great company culture and a more productive team • Focusing on retaining staff will save you recruitment money and time and will avoid disruption to your workflow • You will have peace of mind that you are legally compliant • You will be able to align the right people with your business goals • There will be less 'grey areas' and more clarity on what employees can expect when working with you.
So how do you build that culture where staff will feel motivated and encouraged? Organisational culture is determined by how people interact with each other. It is a behaviour that each individual must conscientiously watch and improve and as each person does that, it becomes a piece to a much bigger puzzle. As all staff improve their own culture, it feeds through to their colleagues, which feeds through to other departments and so on.
The goal in most cases is to maximise the financial returns to the business owner, however, in cases of family succession this may be secondary. Amanda Chase graduated in HR Management & Employment Relations in 2012 and has worked in the HR field for many years. If you feel your business could use a hand in HR matters please feel free to contact her on (09) 215 9746, or email amanda@buildingrecruitment.co.nz.
If you want to have a culture that encourages safe work practises, then you start by focusing on safe work practices within the office. If you want to have a culture that provides service on time to your clients, then you must cultivate a culture of being punctual for internal meetings. How we behave as leaders drives the kind of culture we want to end up with. This also means that if your business has been doing something a certain way that hasn’t shown the desired results, then ensuring you have the right leaders to guide the change is extremely important. This includes having those HR practices in place or having someone to help you set those up. Some of the pitfalls of not having those HR practices in place are: that you could potentially lose good staff, promote the wrong staff and waste time and money on recruitment due to high staff turnover. Not to mention the possibility of personal grievances and the reputation of a revolving door for employees. It is much more cost effective to do things once and do them well. And to have a well-run business, you can’t get away from HR matters. Building Recruitment has recently launched it's own HR division, in response to the demand from small to medium sized businesses who don’t have an HR specialist within their organisation. Some of the areas that we are able to assist with are: employee administration and induction, health and safety, training and development, pre-employment screening, performance and retention management, succession and career planning, HR planning, compliance, legislation, and more.
Two types of plans need to be prepared in order for a business owner to successfully leave or exit the business.
Kevin Vincent, managing director of Vincent Consulting
Personal goals and action plans
• Retire from active involvement (or scale down involvement) by taking on a new partner or appointing a manager
The personal goals of the business owner(s) must be taken into account and plans must be made to ensure that “life after transition” goes smoothly. Personal financial planning and tax planning will need to be considered to ensure the maximum net proceeds and transfer of wealth. Business goals and action plans The business value of the enterprise needs to be maximised prior to the transition. This will ensure that the business owner(s) receive the maximum return on their investment. Plans must be put in place to transfer the management roles and responsibilities that were previously performed by the business owner(s) (management succession). If a management succession plan is considered at least 12-36 months prior to selling, then it is likely that internal structures will lower the risk of failure of a new business owner. This will ultimately increase the value of the business. Why prepare an exit plan? Why would you prepare an 'exit, succession or business owner retirement' strategic plan for your business? No matter how much you enjoy working in your business, inevitably there will come a time when you will need to retire or sell your business. A business owner can retire in several ways. Each has implications, not only for you as the owner, but for the business and the business adviser. An exit and succession plan will help you to consider a variety of different options before you make the final decision. In order to retire from the business, the business owner can choose to: • Sell the business • Transfer ownership and control of the business to family members • Allow the business to cease – particularly if the business is small and closely tied to the owner's personal involvement
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• Allow existing partners or family to run the business and maintain a passive involvement. Each option has its merits and drawbacks. However it is essential that any decision regarding retirement be made early so that death or infirmity does not force an unfortunate decision on the owner or the owner's family. Most business owners are only concerned with selling their business to a third party. Therefore the primary driver for preparing an exit plan is to maximise the value of the business in this sales process. Common problems To ensure you get the best price for your business if you decide to sell, you need to start planning for such a sale well in advance. You also need to consider the issues that could cause you problems. Common problems at the start of the process can include: • Many business owners feel their business is worth more than is justified by the marketplace • Many business owners books and records may fail to reflect the true worth of the business • Many business owners have backdated compliance and financial statements • Some business owners have little systems and processes in place • Most business owners have never reviewed their business from an 'attractiveness to a buyer' perspective so there are fundamental problems that will drag the value down. For more information on exit / succession planning please contact Kevin@vincentconsulting.co.nz for a no obligation free initial consultation.