Owners less keen to sell, business survey finds

Business owners are becoming more reluctant to sell as the economic crisis continues in New Zealand, the ASB succession planning monitor has found.

ASB relationship banking and financial services manager James Mitchell said the overall sentiment the bank was seeing in the marketplace was reinforced in the report as one of caution.

Businesses were also taking the time to shore up and strengthen their businesses.

"Businesses are putting more value and emphasis on having a strong customer base as well as seeking professional advice and support during these tough times. By doing this, they should have a stronger business when the market does turn."

Succession planning readiness showed modest increases in the survey results across a range of circumstances. They included receiving an unexpected offer to buy, unexpected illness, a partner leaving and making key staff shareholders.

The results of the survey indicated that businesses had started to think more about succession planning, but there was still a long way to go, Mr Mitchell said.

Warren Taylor is working on succession planning in Dunedin on behalf of the Otago Chamber of Commerce and has been heartened by the interest being shown by business owners in the region and by the support received from the Dunedin City Council and professionals such as lawyers and accountants.

He was focusing on the small business market, working with owners to set up an exit strategy.

"I am encouraging people to get going now because it will pay off in the future. You will get more out of the back end of the deal if you do the work now, but getting started is the big thing. Once owners get started, they are over the first big hurdle."

One of Mr Taylor's first questions of business owners was what they wanted to do with the rest of their lives.

Many small owner-operator businesses had been so busy working they had not thought about the next step. One of his clients suddenly developed a passion for fly-fishing and knew then what he could do as a next challenge as he prepared to wind down his involvement with the business.

The owners had to have something to look forward to as they worked through the process, Mr Taylor said.

"Often the most people have thought of is going on a trip, but they need to work out how to spend the rest of their life past the sale. Getting that right gets them going."

The key was to listen before talking, he said. Finding out from the business owners what they wanted to do and how they thought they could leave the business was crucial to a successful exit.

Mr Taylor was also working with expat New Zealanders keen to come home as the global economic crisis worsened. They were discovering jobs were increasingly harder to find overseas but often could bring back capital to New Zealand to be used to buy an established business or become a shareholder in an operating business.

"One thing I am particularly willing to do is act as an intermediary for people coming back. If they make contact, I can help point them in the right direction."

Mr Mitchell said many companies had not put comprehensive contingency plans in place to ensure their short and long-term survival. That type of planning should lead into a sound strategy for when the market improved.

"Survival is key in these times. However, it is equally important to take stock and set realistic business goals giving direction for the future."

 

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