I met with a client recently whose business was not going very well. For years the business has not made enough money to justify its existence and it was clear that the owner was worn down and very much over it. The client has been with CNS Partners for only a couple of years but had been in business for over 20 years in total.
The owner had never really thought too much about why he was in business or where he wanted to take the business. He just rocked up each day, worked in the business and at the end of the day was not overly happy with how he traded.
This meeting really got me thinking about business planning and knowing why you are in business. This client found himself in his early 50’s, with no saleable business, no exit strategy and because the business had not done well, no super or other investments. He indicated that he thought he would never be able to retire and if/when he did he would have to survive on the pension.
This could so easily have been different. As a business owner the main aim has to be around generating a certain income in order to live the life you want to now and also save and invest for retirement. If this client had of sat down 20 years ago (in his 30’s) and thought about why he was in business and where he wanted to be in 1, 5 and 20 years then he may have sold out then and there or made drastic changes to turn the business around. Without clear goals how could he possibly have known what he was even aiming for in terms of net profit etc?
Fortunately, we were able to work through options around moving the business to a large competitor and possibly securing a job with this competitor. If this works out and planning is put in place around retirement, then there is still time for a good outcome in this case.
The initial planning that is required to avoid a situation like this does not have to be complicated. It can be as easy as:
- Where am I NOW in terms of my personal financial position?
- WHERE do I want to be in 1, 5, 10 and 20 years (again personal financial position)?
- HOW much income and what nets assets do I need to generate to get there?
- HOW will my business get me there?
By answering the above questions, you really can start working out what is required in business so that you do not turn around in 20 years time and wish you had done things differently.
I challenge you to ask yourself the 4 questions above. Better yet come in and see me, call me on (07) 3356 7088 or send me an email: email@example.com and we can work through these questions.