61 per cent of business owners aged 50 or older in New Zealand will retire within the next 10 to 20 years. And with approximately 10,000 other businesses that could change hands over the next five, we’re likely to see a surge in the number of businesses on the market.

These business owners are looking to move on but many don’t have succession plans – do you?

If you don’t have a plan in place, you need to get working on it as soon as possible, especially if you plan to retire or move on from your business any time soon. Failure to do so may see you struggle to pass your business on or be forced to sell it for far less than it’s worth.

Business Advisors and Directors of Advantage Business, Murray Fulton and Rod Way, have helped many businesses in NZ with succession planning. Here they share their knowledge to help get yourself and your business prepared.


Why do I need a succession plan?

Murray Fulton, succinctly explains why succession planning is so essential:

‘You make money in three ways in a business. You buy well. You run it well. Then you exit well. Up to a third of the value in your business is made by buying well. Running it well ensures you maintain your investment and exiting well ensures you don’t lose it.’

Succession planning is all about exiting well. With a smart plan in place, you will be able to sell the business for a good price and/or watch it continue to thrive when you hand it on. This is essential even if you’re handing your business down to a close friend or family member.

A detailed plan also helps to preserve your legacy and ensure that the business you’ve spent your whole life building doesn’t come crashing down the moment you put your feet up. Once you leave, the plan will ensure that whoever takes over knows what they’re doing. Rod Way, Director and Advisor at Advantage Business has seen the importance of this first hand:

“A couple I knew wished to exit their business but the son was not yet ready or able to take over. A caretaker General Manager was appointed in the interim. While he took care of the business, he did not feel required to train and mentor the son. This left the son feeling disenfranchised and following the GM’s resignation, the parents were forced to step back in.”


What are the signs that it’s time to start succession planning?

Every business owner needs a succession plan. With that said, there are a few signs that indicate you need to start succession planning urgently to ensure a successful exit from your business. For example:

  • If the succeeding generation is experiencing frustration with a lack of direction or clarity around the present or future roles in the business.
  • When your passion for the business begins to wane, and you’re struggling to get out of bed because you don’t want to work there any more.
  • A realisation that the relative you had earmarked for succession may not want to take over the business.
  • When moving the business forward will require more capital investment than you are willing to make.

Don’t wait until these signs start showing to make a succession plan – start now.


When should I make my plan?

Rod believes in the old adage that if you fail to plan then you plan to fail. That’s why he advises all the businesses he deals with to prepare a succession plan sooner rather than later:

“As a general rule, if you are 5 years away from retirement you need to have a plan for what the future looks like. This will provide both sureties around your personal financial well-being and a plan for how your business will continue to prosper without you.”

Once you have a plan prepared, you need to start executing it an absolute minimum of three years before you leave. Anything less than that will be totally undercooked.

To create your own detailed succession plan, give our team at Advantage Business a call today. We’ll start by learning as much as we can about you and your business before running through a meticulous planning process that takes about 6-12 weeks. From there we’ll create a plan for your business that ensures you can continue benefiting from it for years to come.

Don’t be afraid to take advantage of our experience – it’s what we’re here for. Have a no obligations chat to one of our friendly, local Advisors today about how succession planning can work for you.

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