BAY OF PLENTY BUSINESS NEWS JANUARY 2020

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10 BAY OF PLENTY BUSINESS NEWS January 2020 One way to sell your business for more Quite often when a vendor goes to sell a business, they have had enough and want it sold in short order. The vendor assistance period (if any) is often quite short. Now in most business sales the vendors sell 100 percent of the business outright. However, there are times when a vendor could do better out of a business sale if they considered staggering the sale out over a few years by selling incrementally to a new owner. Historically these arrangements have tended to take place when an existing employee has been identified to one day take over as owner. However, I believe that we will see proportionately more businesses that will consider an arrangement like this to maximise the price they get. One of the downsides of a standard business sale process Involving a minority shareholder is a significant decision, but one that should be considered as part of any succession planning process.” is that potentially the buyer pool can be limited. Say a business is worth $1million and is listed at that with a broker. Unfortunately, not all potential buyers have $1million in the bank, or access to enough finance. Now this is a generalisation, but more and more people in the business buying phase of life are closer to the start than the end of large home mortgages. They have not benefited from strong real estate markets, so they do not have a lot of equity built up. And that limits the buying pool. Here are a couple of advantages to selling a business over time in this manner: 1. Over the years that the vendor is still a partial shareholder, they are still making their share of ongoing profits – they may have missed out on some of these had they sold outright. 2. A deal like this may allow an element of vendor finance. If a deal like this is available it may make the buyer pool larger, which could make the business more valuable. 3. This offers the ability for a smooth transition between owners as the new owner is really embedded in the business before the original vendor completely sells out. 4. Where a business is heavily dependent on the original owner, then it is a way to achieve a much higher sale price than would otherwise be the case in an outright sale. BETTER BUSINESS BUYING > BY TOM BESWICK Director at Ingham Mora Chartered Accountants in Tauranga, is a business advisor who specialises in buying and selling businesses. He can be contacted on 027-5744- 019 or tom@inghammora.co.nz Yes there a few downsides as clearly a business sale arrangement like this is going to take much more work than an outright sale. Here are a couple: 1. The process is more complicated and takes more time. It means the vendor is tied up with the business – they need to ensure they leave a few years to exit slowly, rather than waking up one day and deciding they will list the business. 2. The vendor retains the risk of being in business – if performance drops then they may earn less from the sale. 3. Finding the right buyer who you can transition ownership to (and who you can work with daily) can be a challenge. I believe there is a growing untapped pool of business buyers out there. People who have the skills and desire to own and run a business, but do not have the equity and need a way forward be able to buy. If you are thinking about exiting your business, then you may have more options than you realise. Involving a minority shareholder is a significant decision, but one that should be considered as part of any succession planning process. It may give you more in the bank, a steadier handover process, and the ability to ensure your “baby” is in good hands before you close the door for the last time. Getting great advice about your options is key. Back your next project with better knowledge. Our immense local knowledge, combined with our years of experience, has seen Stratum become a leading land development and land utilisation consultant in the Bay of Plenty and throughout the North Island. Every day we exceed expectations and deliver better outcomes for our valued clients. Experience. Knowledge. Better Outcomes. Our knowledge. Your project. Better outcomes. ENGINEERS . PLANNERS . SURVEYORS . ENVIRONMENTAL WWW.STRATUM.NZ | 07 571 4500
BAY OF PLENTY BUSINESS NEWS January 2020 11 Why workforce planning should be your New Year’s resolution Okay, so who’s made a New Year’s resolution? Many people see the new year as a time to reflect, re-evaluate, set goals and take those first steps towards a new, improved version of themselves. Your workforce is no different. As festive indulgences catch up with us and we swear off sugar, alcohol and late nights, employers’ thoughts should also turn to sustainable, long term goals for keeping their workforce in tip-top shape. Workforce planning means ensuring you have the right people, with the right skills, at the right time. It means not being understaffed, or overstaffed. And not getting caught short. Sound about as achievable as abstaining from wine and chocolate for a whole year? It may not be 100 percent achievable, but with the right strategic planning, you can front-foot your business or organisation’s employment needs before they arise. Well thought-out workforce planning can not only help you attract the right talent, it can help you develop the employees you already have to make the most of their strengths. And with the current tight employment market, that’s got to be a good thing, right? Some things to consider: Analyse your current talent pool Take a deeper look at your workforce. Where does understaffing most typically occur? Is there a large turnover in one particular area? Do you have long-term employees who are nearing retirement age? Are there employees who could move up the ranks, or sideways? Look to the future Align your current employees’ skillsets with the strategic direction of your business or organisation. What projects do you have coming up? What skill deficiencies do you have in fulfilling these? Can you outsource any of the upcoming work? Make a plan Once you have identified any gaps in your current and future staffing needs, it’s important to put a plan in place. That could involve developing current employees through additional training, or hiring new employees. If you are recruiting, how many people do you need? And what will your recruitment process look like? Workforce planning is a wider function than just HR. It involves multiple departments, from the financial to the marketing team. Call on the in-house expertise, knowledge and experience you need to get it right. Evaluate and re-evaluate Workplaces are constantly evolving, and with them workforce requirements. It’s important to regularly revisit your plan, and evaluate whether it’s achieving its intended purpose. Any failings will provide important insights into how you can fine-tune your strategy going forward. If this all sounds like common sense - that’s because HUMAN RESOURCES > BY KELLIE HAMLETT Director, Recruitment & HR Specialist, Talent ID Recruitment Ltd. She can be contacted on kellie@talentid.co.nz or 027 227 7736 it is. But it’s surprising how many businesses take a kneejerk approach to staffing, which can be both inefficient and costly. Planning ahead means you can anticipate both realistic timeframes and costs. Now that’s a New Year’s resolution worth keeping. At Bayleys, we believe relationships are what businesses are built on and how they succeed. We understand that to maximise the return on your property you need: Professional property management A business partner that understands your views and goals Contact the Bayleys Tauranga Commercial Property Management team today. Bayleys Tauranga Commercial Property Management 07 579 0609 jan.cooney@bayleystauranga.co.nz SUCCESS REALTY LTD, BAYLEYS, LICENSED UNDER THE REA ACT 2008 ALTOGETHER BETTER Residential / Commercial / Rural / Property Services
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