Award winning accountancy firm Lamont Pridmore urges owner-managed businesses to begin succession planning to protect the long-term value of their asset.
Owner-managed businesses often struggle with succession planning due to practical barriers and a reluctance to step back.
A business performing well today could still be fragile and exposed to shocks if its future depends entirely on the owner.
Chief Executive Graham Lamont highlighted the long-term risks associated with a lack of succession planning and founder-dependency.
Graham said: “It might be easy for owner-managed businesses to focus on current success and turn a blind eye to future planning, but what happens if you wanted to change leadership or sell your firm?
“Owner-managed businesses might understand the importance of preparing for leadership transitions but could find it hard to commit to plans.”
Founder dependency is a common issue, meaning that a change at the top position could grind operations to a halt.
Chris Lamont, Partner and Managing Director, at Lamont Pridmore agreed: “Those who have built a business up from the ground have also developed important relationships and knowledge that can’t easily be transferred.”
“While careful planning can allow their leadership to be replaced, a lot of business owners might feel reluctant to leave their duties behind.”
Valuation uncertainty might cause problems as business owners are unaware of what a sale or exit would look like financially.
Without this baseline, owners cannot plan to maximise value or know when a good time would be to hand over their leadership.
“While these factors do play some part in succession planning avoidance, the emotional aspect of handing on a business can hit owners especially hard,” said Chris.
“Building a business yourself is something to be proud of, which makes retirement from duties feel less like a reward and more like a like a loss of identity.
After acknowledging how emotional a business sale can be, Chris Lamont warned of risks that owners were exposing themselves to without proper contingency.
“Planning ahead safeguards your business, employees and family wealth.
“Family wealth can disappear without a plan, especially with the addition of a Business Property Relief cap and the increased exposure to Inheritance Tax.”
Mr Lamont reassured business owners that no time is too late to begin succession planning. However, he added the best time to start was today.
“Business owners should begin to identify critical roles in their firm, develop internal talent for leadership and create a clear transition plan for long-term continuity.
“Keeping a succession plan that is regularly updated can build confidence among employees and stakeholders, even if a sale isn’t likely anytime soon.”
He positioned Lamont Pridmore as the choice for owner-managed businesses wanting long-term strategic advice that can help businesses last generations.
“As a family run firm, Lamont Pridmore understands how common the succession gap is, but the sooner the plans are put in place, the more options that remain.
“You don’t need to decide to sell or commit to an exit, but you should have the options still available to you.
“So, get in contact with your local Lamont Pridmore branch today.”
