How would you feel if your million dollar business sold for $100,000?

Marnie and Joan, two women with complementary business skills, were equal owners and operators of a thriving business. Both in their late forties they initially asked my firm for guidance in managing the excess cash their business generated.

Our analysis process uncovered several operational flaws that would leave them vulnerable if not addressed, including not having formalised strategies to manage staff, growth, business systems, contingencies or an exit strategy. They had no formal agreement because they’d been friends for a long time and felt no need.

When we revealed the benefits of a formalised business strategy, they decided to implement our system, protecting them from future unforeseeable contingencies.

Unfortunately, during the implementation phase of the plan they had a serious difference of opinion on business strategy and engaged their local lawyer rather than a specialist in business and succession law to negotiate the terms of their agreement.

Marnie, decided she was sufficiently competent to implement their strategy without any guidance, with dire consequences.

Eventually the company toppled when three of the six succession triggers were activated:

1. Dispute When the partners disagreed Marnie purchased Joan’s shares in the company, causing her excessive financial and personal distress because she was barely able to manage the additional financial commitment.

2. Disability Marnie, usually strong and decisive, had undervalued Joan’s complementary skills which had contributed to the company strong performance previously. She was now thrust into decision-making across areas in which she was not sufficiently competent. The significant increase in stress lead to a decline in Marnie’s health and she was diagnosed with cancer.

Without a contingency strategy, the financial performance of the company plummeted, and because Marnie was already overcommitted financially   members of her family who lacked business skills, were forced to work in the company

3. Death Shortly before Marnie’s premature death, she accepted an offer to sell her business to an opportunistic buyer who would pay no more than $100,000. The business, her health and personal finances were now in such a poor position that Marnie was unable to negotiate a better price and agreed to the offer.

Sadly and avoidably, Marnie and Joan both lost everything they’d dreamed of creating for a successful future. They’d ridden on the crest of a wave for so long, that they simply couldn’t imagine that circumstances would ever change, and lead to their demise.

Startling statistics reveal that 75% of Australian business owners are not prepared to address their succession.

If you don’t want to leave your business for some time, you may feel it is a bit premature to implement your exit strategy. However; 51% of proprietors leave their business due to circumstances they could never have imagined, and with 50% of marriages failing, divorce tops the list as a succession trigger.

When you consider that cancer alone will affect 50% of Australians, and add other health factors which could drive you or your associates out of the workforce you can begin to appreciate and share my concerns for the future financial wellbeing of Australian business owners.

How prepared are you to exit your business profitably in either planned or unplanned situations?

Ask “The Exit Experts” how you can take control of the terms of your exit, no matter what the circumstances. www.YourBusinessSuccession.com 1300 499 225