Get in touch with us

Book a FREE consultation
and receive your complimentary eBook

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

    What areas of financial planning are you looking for advice on?

Book a FREE consultation
and receive your complimentary eBook

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Small Business Succession Plan

Small Business Succession Plan with Yield Financial Planning advisors
business and finance
Business Planning Make your business and personal financial plan work together

This blog forms part 4 of our business succession cluster of content, which includes selling your business; outlining a business exit strategy plan; and small business succession planning 

Building a business and an effective small business succession plan involve years of dedication, hard work, and financial investing. However, the key to you making a successful exit from your business, at a fair market value, is to create a robust succession plan.  

In Australia, a small business succession plan is fundamental for ensuring a controlled transfer of business ownership and securing long-term viability of the business. In this blog we will delve into the significance of small business succession planning from a financial planning perspective. Additionally, highlighting how Yield Financial Planning can provide invaluable advice and support throughout this critical process. 

The Importance of Small Business Succession Planning:

A small business succession plan is a comprehensive strategy that outlines the steps involved in transferring ownership and management control when a business owner retires, becomes incapacitated, or decides to exit the business. It encompasses various elements, including identifying potential successors, valuing the business, addressing legal and tax considerations, and implementing a plan for a successful transition. 

Financial Planning:

Financial planning creates the link between your personal financial objectives and your business succession planning needs. By having a well-rounded financial plan in place, you will help ensure you achieve a well-executed and financially optimal transition for your business as well. Some of the important ways financial planning will support your business succession plan include, helping you prioritise your objectives, plan for tax and estate, and retirement planning.  

Business Valuation:

Identifying the fair market value of a small business is the start of any successful succession plan. Financial planners that specialise with business owners will work with your other trusted professionals to understand the value of your business and potential for improving it. Business owner financial advisors will have a network to share as necessary also. Valuation methods can vary, including the income, market, or asset-based approach to accurately determine a business’s worth. Factors that should be considered include assets, liabilities, cash flow, profitability, market conditions and goodwill. Maximising value will normally take some time and adjustments in your business to prepare and may differ based on what exit strategy you choose to pursue for your business   

Tax and Estate Planning:

Small business succession has significant tax and estate implications. A financial planner will craft your financial plan considerate of what you are trying to achieve, your estate and tax planning and work with related professionals as appropriate. Tax structuring is fundamental to this, including trusts and bucket companies. Small business tax exemptions in Australia often provide opportunities to reduce tax on business sales and even fully mitigate them, when they are applied appropriately. Business succession planning including buy/sell agreements, create a pathway to manage health issues for business owners that may intervene with their business succession plan. Consideration should be given to how you can transition wealth from your business into super for your retirement where appropriate also 

Retirement Planning:

Succession planning is closely intertwined with retirement planning for business owners. Financial planners assess your retirement needs, recommend appropriate investment strategies and ensure a reliable income stream is secured during retirement. This process can include analysing personal savings, superannuation, investments and other relevant retirement assets where necessary. Often for business owners there is an opportunity to leverage off the structures they already have in place. Developing a well thought out plan in how you structure your finances in preparation for retirement is fundamental to business owner succession planning. 

Secure your business with Yield

The Benefits of Early Small Business Succession Planning:

Commencing the small business succession planning process earlier rather than later can provide you with numerous advantages. Early financial planning allows businesses owners to identify and develop successors; maximise business value; and address funding requirements, which we unpack a little here. 

Identify and Develop Successors:

By identifying and nurturing potential successors within an organisation, business owners can establish a strong foundation for future leadership and management. This can include, providing mentoring, training, and other opportunities for skill development.  

Maximise Business Value:

Seeking advice from a high-quality financial planner can empower you to make more beneficial financial decisions and optimise your businesss value, while marrying your business goals to what you want out of life personally.  

Address Funding Requirements:

A good financial plan can help determine the funding required for your small business succession plan. By carefully assessing the financial needs of the transition, business owners can explore the various financing options available, such as loans, equity partnerships, or leveraging existing assets. This ensures a smooth transfer of ownership while maintaining the financial health of your business.  

Business Valuation Process

How Yield Financial Planning Can Help:

The advisors at Yield Financial Planning are trusted partners, specialising in assisting small business owners with binding their personal financial plan to their succession planning. Our expertise and tailored solutions provide the following benefits: 

Comprehensive Business Analysis:

The Yield team seek to understand your financial position, including cash flow, profitability, growth potential, and market conditions, then look to leverage your business position to assist with your wealth creation and retirement objectives. We will work with your Accountant and other trusted advisors to assist you to maximise the value you extract from your business. 

Personalised Financial Strategies:

At Yield Financial Planning, we develop personalised financial strategies aligned with a business owner’s retirement goals, tax considerations, and the business succession plan. By understanding the unique circumstances of each business, we provide recommendations to maximise value and minimise tax burdens. We seek to grow assets through appropriate investment of business funds, considerate of personal goals and tax outcomes.  

Expertise in Tax and Estate Planning:

Yield advisors work closely with legal and tax advisors to ensure the seamless integration of estate planning and tax strategies into your succession plan. We assist in structuring the owner’s estate, minimising tax liabilities, and optimising asset transfers. This may involve establishing trusts, utilising tax exemptions and deductions, or implementing effective business structures to minimise tax obligations. We also assist with buy/sell agreements between business partners and provide insurance advice on the cover that can underpin a financial agreement, such as life insurance.  

Ongoing Support:

Recognising that succession planning is an ongoing process, Yield Financial Planning provide continuous support and guidance throughout the transition. We review and adapt strategies where necessary to ensure the long-term success of the client’s business and personal financial well-being. This includes scheduled reviews, monitoring of financial performance, and adjustments to investment and retirement strategies to align with changing goals and market conditions. 

Contact a Yield Advisor Today!

A carefully crafted financial plan for business owners, is highly complementary to a smooth business succession plan. A strong financial plan plays a pivotal role within this process, highlighting valuable insights into tax considerations and retirement planning. 

Get in contact with the team at Yield today to plan your business succession and achieve a smooth transition to retirement on your terms. 

Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

decoration leaves 1
decoration leaves 1
decoration leaves 1
decoration leaves 2
decoration leaves 2
Free Consultation

Free Consultation

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.