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Announcement posted by TLK Partners 13 Jun 2019

4 in 10 New Businesses Fail in First 4 Years

Australia is home to more than 2,065,523 small businesses employing less than 19 people, accounting for 97 per cent of all Australian businesses by employee size.

While small business failures are still a concern with four in 10 not surviving more than four years, there has been growth in the numbers of small businesses over the year.

Many businesses in Australia are still family owned and are often too busy dealing with today’s operations to worry about who will be running the business when the owners no longer wish to.

However, putting off establishing a clear-cut succession plan in a family business can inevitably lead to future problems and can drive a deep wedge into the closest of families.

Australian financial expert Thomas Mousa, a chartered accountant, director and partner at Sydney-based TLK Partners says, "To ensure continuity, a succession plan is essential for every family business and this is regardless of whether the family runs a global empire, family farm or corner store."

"Although you can talk about the family business around the kitchen table, it is a good idea to have formal family meetings with a structured business agenda. Consider having someone external to the family facilitate these. This is also an opportunity to encourage open discussions to ensure there isn’t a break-down of communication between all the family members involved in the business," Mousa suggests.

Have a plan for the exit of the older generation by setting dates and ensure there is enough retirement planning to ensure the older generation is well looked after for in retirement.

Mousa says, "If you fail to have the total support of the older generation then they are unlikely to relinquish their control and position in the business."

Who replaces the older generation is a vital issue for the business to succeed. "It may not always be appropriate for the eldest child to automatically take the lead (whether they expect to or not). There must be open and frank discussions on this issue and a firm decision made on a suitable successor. Having someone to take over the business for the right reasons and not based on an obligation is essential, so choose wisely," Mousa said.

"Getting the right advice is essential," Mousa explains, "it is crucial that all-important planning issues are discussed with your professional advisers. A solicitor will assist in drafting documents including any applicable loan documentation, an accountant will assist with the tax implications on the sale of the business and your financial planner will assist in the retirement planning for the older generation and superannuation."

Mousa recommends to "set dates for future meetings so that discussions continue until the succession plan business has been completed and all family members have been provided for."

It is important that you keep your succession plan current. Changes in personal circumstances, health and goals can prompt an alteration in a succession plan and these should be reviewed and updated to ensure that what you have agreed upon remains relevant.

"TLK Partners promote a simple and commonsense approach of preparing in advance, seeking professional advice supported by sound, unemotional management, to set the future of the business in good stead and allow it to continue in its success for many years to come, " Mousa concludes.

TLK Partners Wealth Management Companies Kingsgrove, Beverly Hills | Tax Accountant & Agent | Property Advisers are financial management, retirement planning and wealth advisers serving enterprises and private individuals who hope to take care of their future through sound financial management. Visit their website or contact them at (02) 8090 4324 for an appointment to discuss your financial management and investment needs.

This material is of a general nature only, and it does not take into consideration your financial circumstances, needs or objectives. Before making any decision based on this content, you should assess your own circumstances, seek professional advice or contact our office to be directed to the appropriate professional. Whilst all care has been taken in presenting the material neither TLK Partners or its associated entities guarantee that the material is free of error and, the information may have changed since being published.

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