Entrepreneurial succession : One must look at both sides of the coin

When a business changes hands, legal and fiscal aspects are systematically addressed by both parties. However, the human aspect is often overlooked or set aside, even though this is crucial to ensuring a win-win handover. Consideration must be given to the objectives, values, aptitudes, strengths and challenges of the seller and the buyer. One must look at both sides of the coin.

Despite the fact the market is in full employment at this time, there is a shortage of labour, which means that workers have numerous interesting employment opportunities to choose from. According to a survey conducted for SADC in 2015, one-third of business owners mentioned that they planned on leaving their business in the next few years. In the fall of 2018, a second survey again performed for SADC revealed that this trend has continued. As a result, many entrepreneurs will be attempting to find successors. This means that the sellers must find ways to make their companies attractive and convey the passion they have for their business. They must come up with the ideal candidate, work alongside them and especially ensure that there is something in it for each party.

Of the more than 300 companies that responded to the survey in the fall of 2018, 48% mentioned that they had not yet begun to think about it, with another 33% indicating that they thought about it without doing anything else. However, most business owners who are planning on leaving and gave some thought to the idea claim that they are confronted by specific concerns or challenges with respect to succession planning.

To help you as you reflect on this issue, SADC has prepared a series of newsletters on entrepreneurial succession dealing with the following themes:

• Both sides of the coin
• What am I selling?
• A fair price
• Keeping the business going
• Life after selling.

Keep an eye out for these in the coming weeks, and may you enjoy giving this some thought!