Having business owners with shared vision and values is one thing, but ensuring that your objectives and timeframe are also in harmony is essential to avoid a dysfunctional organisation or worse an acrimonious falling out between business owners. Agreeing sensible measures is so much easier when relations are cordial rather than fractious!.
A few years ago I watched with horror how a sound £10m turnover business literally tore itself apart as a dispute between the business owners led to a very painful (and costly) splitting of the business into 2 parts. How can you plan to avoid this destructive situation?
Sensible steps to work through:
- What are your personal goals and aspirations? Do you know those of your co-shareholders?
- What are the company values? Why are you really in business?
- Agree your strategic business plan for the next 3 to 5 years – will this deliver your personal goals?
- What is the best share structure for tax? Consider both current tax payable eg Salary vs Dividend but also tax payable on eventual business sale.
- Are all stakeholders clear on the difference between Shareholder and Director roles? (vfdnet runs Directors Duties workshops for new Directors.)
- Which decisions need to have shareholders approval rather than Directors?
- How will Directors decisions be made? What happens when there is difference in opinion?
- How will shareholders be allowed to sell their shares?
- Start planning your Exit Strategy – putting this off will mean a compromise between the Business Valuation you can achieve or the timeframe!
- How can key managers be locked in through shares or share options, without the loss of your control? Email me if you would like a copy of our Share Option White paper.
The End Result
Time spent on your business will pay you dividends. We love facilitating Strategy Workshops for business owners to help them to get the planning right, including legal documentation (via trusted corporate lawyers).
If you would like to discuss any matter raised in this newsletter then please do contact us.