By Michelle Geraghty, Head of Business Development, FNB Business Advisory and Louis Weitz, Channel Head at FNB Financial Advisory

While the main reason someone starts or enters any business is ultimately to make money, sustainable business success is about more than just generating month-to-month revenue. Of course, cash flow, profitability and growth are all critical to the success of any business – whether it’s a retail store, a factory, an import/ export or farm – but what few business owners realize is that it’s not enough to work in business, you also have to work on this. And that’s especially true if you want to build a business that can be a valuable legacy for your future generations.

To fulfill that legacy as a business owner, or simply to ensure that your business supports your retirement aspirations, it is extremely important to determine what your ultimate business goal is. Given the passion and hard work it takes to build and grow a successful business, it’s unlikely you’ll just want your business to cease to exist when you one day retire or pass away. But while most business owners want their business, organization, or farm to continue into the future, few really think about what that future will look like when they are no longer at the helm. And that’s why the ETF business will concept is so valuable.

Unlike a personal will, a business will is not a physical testamentary document, it is a way of thinking about what you need to do in your business today to ensure it achieves the future you desire. , for yourself, your family and the company itself. . While there are many steps involved in this Business Will process, it basically boils down to the following three main components:

  1. Understand the risks to your business when you leave

While there are legal structures and requirements in place to ensure an arm’s length relationship between business owners and their business entities, the simple truth is that you can never completely separate the individual from the business that you ‘he owns. This poses potentially significant risks to the business when you reach the stage of withdrawing from it. There are many such risks that you need to be aware of, be it changes in the established way of working, changes in relationships with suppliers, business partners and even trusts, settlement of loans intercompany, freezing of bank accounts (in the event of your death), one-time and ongoing costs of financial support, and many more. A well-structured Business Will process includes a comprehensive governance health check and analysis of all risks associated with the potential departure of an owner or director from a business, and FNB Business Advisory supports this analysis with advice. on best practices on how to manage and mitigate these risks.

  1. Plan for the future growth and value of your business

The success of any exit strategy is inextricably linked to the value of the business at the time the existing strategy is executed. This means that the more valuable the business is when you leave it, the more value you will be able to extract from it to support yourself for the rest of your life. As a business leader, recognizing this link between the future value of the business and the financial benefits available at the start can be very motivating. For this reason, FNB’s Business Will process includes an in-depth analysis of how a business owner can leverage FNB’s full suite of business solutions to maximize growth and create exponential value before exiting the market. owner.

  1. Development of a clear company exit strategy

It might seem counter-intuitive to think about how you might want to end your relationship with your business when you’re starting up or still developing it, but it’s extremely important that you have a clear plan for how you want to end your relationship. exit and succession plan in place well in advance of when you need to execute it. Obviously, there are many exit options available to business owners, and these differ depending on business types and owner preferences, but regardless of how you plan to run your business when you are ready to go (or when you leave unexpectedly), what matters is that you have that plan in place now. That way, if you’re planning to leave the business to someone else, you can be sure they really want it. and if you are considering selling part or all of the business to fund your retirement, you can ensure that it is as attractive and viable to investors as possible.

It is important to note that taking the time to conduct this type of business readiness process is not only a way to ensure that you have a viable succession plan in place, it is also a worthwhile investment in the right governance – which is ultimately at the heart of any sustainable and successful business. , regardless of its size or the nature of its activities. Getting your proverbial business “shot in a row” in this way can also be invaluable in terms of improving your business’s appeal to potential customers, partners, investors and financial institutions; and it makes the bidding and due diligence processes that are part of so many business transactions these days much less burdensome for everyone involved. FNB has even put in place mechanisms and partnerships to facilitate private equity investment which is now achieving vital BEE compliance and ultimately enabling a phased exit for the owner.

But arguably the most valuable outcome of undertaking a Business Will process, in whatever format you choose to conduct it, is that it creates absolute clarity as to the vision you have for the immediate and distant future. of your company. And such clarity of vision is what ultimately lies at the heart of enduring business success.


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