Business will be worth more if it can run itself

QAI OWN a building company with a turnover of around £2.5 million. We have enjoyed solid growth in recent years thanks to major contracts with a national housebuilder. I’ve always been a workaholic; I currently do more hours than ever but I am 55 and want to retire in the next five years. What potential risks do I face? FIRST, congratulations on your successful business and also on setting a date for your retirement! This is something many business owners struggle with because their business is too reliant on them.

Coincidentally, we recently quizzed 500 UK business owners about their businesses, wealth, investments, spending habits, future plans and financial security. The results revealed many business owners are dangerously leaving their equity open to significant risk.

There are many areas you can examine but you mention you have major contracts with one customer. Our study discovered a huge degree of exposure here: 43 per cent said they have a major customer they rely on - and more than half of the businesses in the construction industry admitted to this.

What would be the impact of losing that key customer? What would your business be worth without that major contract? Don’t put all your eggs in one basket. Widen your customer base so your business can survive a lost contract. This will put you ahead of your competitors and make your business a more attractive investment proposition.

Alarmingly, 54 per cent of business owners feel their company could not survive more than a week without them! Sound familiar? Be sure to work ‘on your business’ not ‘in your business’ to prime it for sale. Your business will be much more valuable if it runs itself rather than relies on you.

Take action now to reduce your business risks and maximise the value of your exit.

You can get the full results of Haines Watts’ ‘For Love or Money’ report at www.hwca. com/for-love-or-money.