With 40 percent of business owners planning to leave their business in the next four to five years, a succession plan is also vital, says Ord. “There seems to be a lot of business owners heading toward the question of whether they’re going to remain in business or retire. If you have a succession plan, you’re obviously one step ahead of people who don’t.”
According to CPA Australia’s Small Business Successions and Exits survey, only 10 percent of SMEs took over their family’s business. The remaining 30 percent took over another established business, and the remaining majority of 60 percent started a new business. “It may be a two or three year process to prepare your business for a sale or transfer.”
Careful planning again helps if you intend to apply for any financing to increase your business boundaries. “A business plan with clear goals is often an important factor in decision making for potential investors and banks,” says Ord.
So what are the steps to create this helpful plan? “The first step is to determine why you’re in the business, the second is to set the goals to meet your objective, and the third is to put in place the strategy,” explains Ord.
Goals will ensure your business resources are focused, to provide you the best results. However remember, your goals should focus on more than just the budget and finances. Whether you’re planning your staffing, client relations, or approaches to new legislation, first review the results of the previous year, and work towards learning from your mistakes.
Business Forecast
Past We are all familiar with the maxim; those who ignore the mistakes of history are doomed to repeat them. Avoid a forecast of gloom and doom for 2008 by reviewing 2007.
Not unpredictably, according to Christine Christian, Dun & Bradstreet Australia CEO, interest rate rises topped the list of SME concerns in 2007, and still more rate rises are expected in 2008.
While SMEs were also affected by increased petrol prices, the year saw a drop in the number of businesses negatively affected from 67 percent to 58 percent. A drop in businesses affected by the drought was also recorded, and now only a quarter of businesses feel the negative impact.
SMEs saw the effects of lagging business-to-business trade payments in 2007, with most payments taking three weeks more than the standard payment term, says Christian. Most failure to pay cases recorded by Dun & Bradstreet were for amounts less than $400, but these small payment evasions can add up to be big for SMEs.
Last, but not least, the credit crunch. Access to credit became, and will continue to be more difficult for SMEs, says Christian. Exporters in particular will suffer as Asia-Pacific trade partners feel the crunch and their importing capabilities drop off.
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