Many business owners put in a lifetime of hard work building their business only to throw away some of the rewards by failing to consider properly how they will exit from the business – both financially and as a manager.
Sound management over several years will add value to your business and allow you to start an exit relatively quickly when the time is right. You will need to concentrate on the main areas of you business to ensure a smooth exit.
- Aim for a year-on-year increase in profits – reducing profits to cut corporation tax liabilities may make short-term sense but it could harm your business’ perceived value.
- Make sure your accounts are in order and up to date and give a true picture of the business – It pays to be ready for any due diligence you may have to go through later.
- Look to expand your range of customers and suppliers – over reliance on a few key customers will undermine your business’ value.
- Aim to tie key customers, suppliers, staff and managers to long-term contracts.
- Maximise your relief for capital gains tax (CGT) – you may be able to claim entrepreneurs’ relief which reduces the effective rate of CGT. So avoid substantial holdings in property, shares or leaving money in the bank which may disqualify you from this relief.
The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.
Please note that advice with regard to exit strategy planning may involve the referral to a service that is separate and distinct to those offered by St. James's Place.