The Australian Bureau of Statistics data shows that from June 2007 – 9 more than 638,000 Australian businesses shut up shop. So how do you preserve your business?
Understand your business structure The first thing to consider, with assistance from your accountant, is the structure you are operating your business in (e.g. sole proprietor, partnership, company, trust or other). From this structure determine what are the tax, superannuation and legal implications of this.
Review the documentation held for the relationship between yourself and the other business owners. Consider what you have in place covering partnership agreements, buy/sell agreements, security for loan facilities, “wills” for yourself and your business, and risk insurance coverage.
Engage and interact with specialists who should know you and your business: * Financier for loans and banking facilities; * Financial Planner to assist with your financial goals; * Solicitor for legal aspects; * Accountant for taxation and financial requirements; * Insurance broker for protection of property and assets; and * Business coach to prioritise personal and business actions.
Determine the life stage of your business and what you want to happen with it. Is it in the development stage, expansion stage, maturity or wind-down phase? What do you expect the business to be doing while in this stage? Plan and implement strategies to achieve this.
Establish an exit strategy from the business for yourself. Consider how you leave the business – will you sell your business, wind it up, pass it on to others, franchise it or do something else?
Think about yourself as well as the business. How will your retirement plans be funded? Ensure you have superannuation or something similar in place besides “the business”.
Identify who is essential in your business for its successful operation. These can be both owners of the business and key employees. What do you have in place to protect them and the business in case of death, disability, illness or injury?
Regularly evaluate and review the risks for your business. This can include the impact of fire, theft, burglary, breakdown of equipment, cash flow, and liquidity.
Consistently review the financial situation of your business. Look at the profitability, income maximisation, expense minimisation, and impact of taxation (including the impact of taxation upon sale of the business).
Work “on” the business not just “in” the business. Take the helicopter view and see the business through the eyes of the target market/customer/supplier/worker. You need the knowledge to act effectively as the business profile changes.
Take time to consider these tips for your business and utilise specialists to improve your strategic planning.
Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on any advice, you should consider the appropriateness of the advice having regard to your circumstances.