With economies worldwide still struggling through a recovery, business owners are understandably focused on survival and growth for today rather than their succession plans for the future.
Whether the business is worth $1 million or $100 million, owners who are able to plan now for the inevitable succession of their business can find unconventional opportunities in these unconventional times.
The succession planning imperative
Staying a step ahead of the competition is fundamental to business success. But many owners don’t consider how succession planning can put them a step ahead too, by helping them to maximize the value of their business.
In fact, many business owners don’t plan their business succession at all. According to a study conducted by RBC Royal Bank(r) in Canada, one in four small- to medium-sized-business owners over the age of 50 plan to exit their business in the next five years.
According to the survey, selling to a third-party was the number one exit strategy (38%) followed by passing to a family member (30%). Five percent had no exit strategy at all! However, 77% of owners have made little or no progress putting a succession plan in place.
Owners of businesses with revenue of more than $5 million annually are somewhat further ahead than the average, though 50% still say they have made little or no progress.
A well-thought-out business succession plan can not only help position a business today for ongoing success by looking at ways to maximize its value, it can help ensure that the owner achieves his or her business and retirement objectives when the transition eventually occurs.
RBC Royal Bank works with business owners and their advisors to plan their succession, both from a business perspective and a personal financial planning perspective to achieve personal objectives and maximize wealth.
Our specialized financial advice for businesses and business owners includes succession planning together with recommendations and an action plan to help you succeed. Call RBC’s Business Banking Department today for more information on developing your specific plan.
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