Posts Tagged ‘Entrepreneurship’

MANY BABY BOOMERS’ REPORTED BEING READY TO RETIRE ALTHOUGH THEY HAD NO DEFINED STRATEGY ON HOW TO EXIT THEIR BUSINESS.

7. Planning for the future

Succession planning and exit strategies were raised as a critical policy issue with the ageing population. Many ‘baby boomers’ reported being ready to retire although they had no defined strategy on how to exit their business. Concern was dominant in regional areas where family members are increasingly pursuing other options, rather than taking over the family business.

ACTION: The Small Business Commissioner will develop ways to help small business operators access the information and assistance they need to successfully manage exiting their businesses.

to view the entire report click here

I was sadly, not surprised to read only last week in my local paper the story of a family owned business with the owners planning to retire in November and have simply chosen to close the doors despite trading for over 40 years. The story includes the very familiar comment “our son and daughter have worked here for 15 years but they didn’t want to take it on” a trend which has been emerging for the last five years and is typical of family businesses unfortunately.

The owners also state that they have been unable to have a holiday since 1995 and have attended the business every day to feed the fish!

Importantly, the article also recognises business owners fear (often well founded) that whilst they may be able to transition the ownership by selling transitioning the management was more of an issue and may well cause them to have to return to their business – “we are quite passionate about what we do and are wary of people coming in and not being able to support it with the rent money” the owner said “we thought if the new owners failed we would have to come back in.”

Sadly this has led to the decision to close the doors after 40 years retire in November and walk away.

The latest survey covers performance during the quarter to end July 2011 and expectations forward for the rest of this financial year, and is the result of responses from over 1800 business owners – approx 1,400 small businesses and about 400 medium businesses ( more than 20 employees ) . Key findings were:

Business confidence fell further during the last quarter, with confidence now at the third lowest level recorded in the 18 year history of the index.

In line with the drop in confidence, there were also falls in all key performance indicators, wiht strong falls in particular recorded in sales and profitability. The latest fall left the profitability indicator at its lowest level in the history of the index. For the year ahead SMEs were expecting further falls on all indicators.

A lack of work or sales remained the primary concern of SMEs this quarter with a large increase in concern levels. This was followed by the economic climate and cash flow.

Support for the Federal government’s policies fell a further seven percentage points in the last quarter. The key reasons SMEs gave for feeling that the Federal government policies worked against them included the carbon tax and a view that the policies were impacting consumer confidence and spending. Net support has not seen lower levels since the Keating Government.

Confidence was highest in the health and community services sector but lowest in the retail trade sector. Regional businesses were more negative than metropolitan ones about the current state of the Australian economy as well as more negative on where the economy will be in one years time.

In terms of planned activities – 22% of business owners said they wanted to personally work less in the business, 18% said they were looking to seek professional assistance to grow and 17% said they would sell or close the business during this financial year. Interestingly 38% planned to increase their digital presence and 26% said they wanted to introduce to increase their social media activities.

Apple announced this week that Steve Jobs had resigned as CEO. Steve Jobs is the creative genius behind the technology company and it’s public face. The announcement seemed to catch many off guard. The media is speculating about what will happen to Apple’s stock and the company’s future. Fortunately, the company had a plan in place.

In its announcement, Apple stated that “Jobs submitted his resignation to the Board today and strongly recommended that the Board implement its succession plan and name Tim Cook as CEO.” That is exactly what the Board did and Mr. Cook is now the CEO of Apple. What is important to note is that Apple had a succession plan in place in the event that Mr. Jobs died, resigned or could no longer serve as CEO. Unfortunately, many companies do not have a succession plan in place. Not having such a plan in place can lead to disastrous results, including the failure of a business

A LATE twist in the bidding war for the accounting software provider MYOB has led to the US private equity fund Bain Capital prevailing in a $1.2 billion deal. A competitor, the British-listed software provider Sage Group, had been leading a pack of rival bidders – including private equity giants Kohlberg Kravis & Roberts and Hellman & Friedman – with a $1.35 billion offer.

It is understood Sage’s bid fell through late last week after falls in its share price – hammered by the broad sharemarket selloff in Europe – meant the value of the MYOB transaction would now exceed 25 per cent of Sage’s market capitalisation. The deal would have required the lengthy and uncertain process of a shareholder vote, which prompted MYOB’s owner, Archer Capital, to look elsewhere and accept a bid worth 10 per cent less.

It is still a hugely profitable deal for Archer. The acquisitive private equity fund bought MYOB in February 2009 for about $500 million, and then boosted earnings by stripping out costs, raising prices and aggressively growing its customer base. ”We doubled the profitability. We basically achieved the three or four things we set ourselves before we acquired it … and we had a lot of inquiry from potential buyers,” an Archer partner, Peter Wiggs, said, explaining the rationale for the sale.

The deal is understood to have been valued at a multiple of 11.3 times earnings before interest, tax, depreciation and amortisation. MYOB is used by more than 1 million small- to medium-sized enterprises in Australia and New Zealand.

Read more: http://www.smh.com.au/business/archer-takes-12b-for-myob-20110821-1j4pf.html#ixzz1VhQMXDGK