When we see this word “Succession”, what do we think about? Why are we in business?
Sometimes it feels like that we have been on the end of a shovel (metaphorically speaking) for forty years yet we not appear to have been as ‘liquid’ as we would have hoped, doing it for the practice? How am I going to get out of this thing making money for my future? How am I going to be able to pass this business on to my children and their wives/husbands without setting them up to fail? How much do I need for the future?
For as long as I can remember Australia’s small business families have been practicing what we now call succession, these days the stakes are a lot higher as can be our expectations. Reality tells me and statistics prove that your average small business be it a cane farm, cattle station or welding works is carrying a lot more debt, on average, these days and as we all know, times are tough, with the general consensus being that things are going to stay tough for a while.
Succession or the lack of it causes pressure in families; it is often for years and years, the elephant in the room. All of that on top of the pressures of trying to make your business perform, be profitable year on year in some of the hardest trading conditions we have experienced in modern times.
How can I put money aside when I am barely keeping my head above water?
Who do I go to for advice on this? Once upon a time a long time ago my friendly Bank Manager would drop by for a chat some good counsel and a few words of encouragement. Those days are far behind us and these days your friendly Bank Manager can be a ‘fair-weather sailor’ who by the way, could be charging you far too much for the privilege of banking with him or her.
There are solutions for these dilemmas and they are as not as far away nor as hard as you think.
You can find that layer of profitability you are missing to reduce debt and save for the future. Your future depends on it and so does the future of your children. Mums and Dads want talk to their children about this but sometimes don’t know how to because they don’t have the solutions and they think that their children expect them to have solutions? What if the business is running rough I am concerned about its future and my pride prevents me from talking to anyone about this yet I know they can sense that all is not right?
Sometimes the kids (who might be nearly 40!) can hear mums and dads quarrelling about the future and they worry for their parents, themselves and their children. What do they do? When?
How many of us are locked into fixed rate loans?
How many of us were told by the Bank 3-4 years ago that you had better lock in as rates might go up? Over the next 1-3 years rates are at least going to stay within .50% of where they are now. I know some people who are paying up to 3% more on their loans than the current market, which is hurting their business and restricting cashflow than can be otherwise devoted to operational costs. How do we get out of this? Is exiting a fixed loan rate before expiry worth doing, what will it cost, how long will it take and where do we go from there?
