Business Life Cycles: Everything You Need To Know

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AUTHOR

Bruce Coudrey

The Business Lifecycle comprises:

Start Up
Operation and Improvement
Wealth Management
Exit

Business Purchase or Start Up

Whether starting a new, or buying an existing, business, the following should be considered to ensure you make an educated decision before proceeding:

Pro's and Cons of the industry
Business Planning
Marketing strategy
Registration and licence requirements
Name registrations (including ASIC and Domains)
Tax Structures and Asset Protection
Workplace Health and Safety
Tax Office Compliance
Intellectual Property / Trade Marks
Insurances - Prof Indemnity, Contents/Building, Public Liab, Workcover, Life, Income protection, Key Man
Finance & cash flow requirements
Staff and employment requirements and obligations
Fixed and Variable expenses, break even analysis
Management and reporting systems.

Operations and Improvement

Sound business operations require the right foundations. This means access to accurate numbers and key measurements in a timely manner so you know what is happening in the business at any point in time. Business owners must be able to regularly review and monitor performance, and make changes quickly. Three main areas for business improvement are:

Increasing Gross Profit margins
Reducing overheads, and
Growing sales. Regular meetings, monitoring and implementation of your strategies enable you to quickly see improvements to your profits.

Many businesses fail because of a lack of planning. It is imperative that business owners manage, monitor and measure business performance to know where changes can be made, and to see that business plans are working.

Wealth Management

What is wealth? To be wealthy simply means you can afford your lifestyle, now, and into the future. Business owners should manage their affairs to grow and build wealth. They should also aim at reducing their input into the business and ultimately retiring.

Exit

There are many ways that this can be achieved. A succession plan or exit strategy will help your business transition smoothly to the new owner – and derive more value. It clearly outlines your timeframe, expected sales value and who your targeted purchaser is. It is highly recommended to plan your exit early, the sooner the better. That way, you have time on your side to maximise the value of your business for sale. Once your timeline is set you can then clearly set measurable targets to reach your business’s full sale potential. It’s also important to know who your targeted purchaser is, being your family, an investor, a new working owner or your business team. There are many different strategies and planning solutions depending on your ideal purchaser... So start planning your exit strategy now!

If you’re thinking of selling your business, send an enquiry to admin@benchmarkbusiness.com.au. One of our brokers will be happy to assist you.

If you would like more information, please see tips and advice from the ATO here:

https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/Tax-governance/Tax-governance-guide-for-privately-owned-groups/Starting-your-business/ Written by Bruce Coudrey Principal Benchmark Business Sales and Valuations

Bruce Coudrey has been Principal of Benchmark Business Sales & Valuations, since 1999. Benchmark is one of Australia’s largest national business brokerages. Bruce is a Registered Business Valuer and has acted as a court-appointed expert witness.