Business owners typically spend years pouring their hearts and souls into creating their businesses. It becomes an integral part of their identity, and their emotions can become intertwined with the success of the one thing that has taken so much time, effort and care to build over the years.
Due to this, business owners will often do whatever it takes to prevent their business from falling apart. However, not all business owners are fully aware of the steps they can physically take to limit these risks and therefore do not take meaningful actions that would enable their business to continue to flourish rather than wither.
Minimising the Risk of Fallout in Business
If you are not the sole business owner and you instead share ownership with others, this can often be very positive for your business. Companies thrive under the leadership of people with different experiences and perspectives. However, more shareholders also increase the risk of more disagreements. Some shareholders may also be at very different parts of their professional journey, and may seek to exit, retire or pursue a different challenge. Some may even seek new responsibilities within the same company.
These are all dangers that come with shared ownership. To prevent fallout from any of the aforementioned scenarios, it is essential to take meaningful action before these possibilities become reality. In order to protect what you and your fellow shareholders have built to date, having a shareholder’s agreement in place will help safeguard your relationships and ensure as few repercussions as possible. If you do not have a shareholder’s agreement in place, there can be a growing lack of mutual understanding, which in turn can create uncertainty around roles and expectations as the business grows.
Understanding Your Business Worth
To you, your business may seem priceless. After all, it represents countless hours of building, growing, and refining to become what it is today. While this sense of pride is a positive attribute to possess as a business owner, often reflected in the success achieved, it is always a good idea to undertake a professional assessment of your business’s true market value.
You may be wondering why this is essential. Well, there are a myriad of reasons why having a business valuation is an invaluable thing to have in the back of your mind, no matter where you are in your business journey. For example, you may want to explore succession options, be preparing for investment, or simply be intrigued about the true value of your business. Despite the reason, though, one thing is certain: undertaking a business valuation can only strengthen your position.
Planning for Succession
When planning for the future, it is always wise to consider your exit options as early as you can. Even when you are not at the stage to sell, maybe even not for a couple of years, you should always have your succession plans in the back of your mind.
Business owners sometimes approach the stage where they decide they want to sell as soon as possible; however, they realise that their business is not in a position to be sold, so they must delay the process further. This is solely because they had not prepared and planned for the exit in advance. To prevent this, plan for the future by taking action early.
Choosing Options That Protect Your Legacy
If you are in the process of weighing up exit options, you may discover that the more traditional routes are not for you. If you want to ensure your business continues with its culture and people intact, an Employee Ownership Trust (EOT) may be the ideal choice for you. An EOT is an excellent option for limiting the risk of your business falling apart under new ownership, as the ownership is handed to the employees who already have a vested interest in nurturing the business and watching it grow.
Just as business owners intertwine their emotions with the success of their business, an EOT gives employees more of an opportunity to feel the same sense of devotion and duty to the business that they now own.
Want More Clarity?
If you are a business owner who feels any of the above is relatable and would like more clarity or confidence in any of these areas, then explore our webinars on demand to dive deeper into learning how to protect your business and plan for the future.
Alternatively, please do not hesitate to contact us and book an exploratory call to discuss where you are on your business journey.