Jeremy Tauri: Ensure your business future is well mapped out

An impartial adviser for an investment could be a good place to start when planning for retirement.

While physical assets are easy to value, profitability which translates to goodwill is the negotiable number.Golf, fishing, family, board appointments or travel? Deciding what to do once you've retired doesn't seem to be a problem for many business owners I've spoken to.

The bigger issue, and one that needs a lot of thought, is how they get to that point.

There are two important questions to consider: Can I get the price I want for my business, or something close to it? And can I find someone who is well-suited to the business to continue the legacy?

Both are hard to answer which is why businesses need to engage in succession planning years before a sale takes place. However, it is usually the price that is the sticking point.

Is the price you are asking valued by some emotional mechanism that only you can justify? Is it that you have an expectation about its value? Do what the buyer would do and get an independent valuation as a reality check.

Getting the right price for your business depends on assets, physical and intangible. While physical assets are easy to value, profitability which translates to goodwill is the negotiable number.

Goodwill is based on the future earnings of a business above a wage a working owner may take. So your numbers need to be up to date and available and good if you're asking a good price.

Finding the right person may not be so hard. If you have key staff that might be the first option pending organising the dollars.

If you have competitors they might be the second.

Make sure a sale isn't a long-term process because the costs of that will then delay your time on the golf course and perhaps erode your investment as you lose interest.

Even if it is many years until you'll want to retire, start asking these questions today. An impartial adviser could be a good place to start.

Jeremy Tauri is an associate at Plus Chartered Accountants.