Read. Review. Recruit. Recruitment Newsletter, Spring 2016
Budget 2016 Update
Recruitment Trends 2016
The National Living Wage is Here
Take a look at the highlights from this year’s Budget, which includes an update on the changes to travel and subsistence rules.
In order to attract and recruit the best employees year after year, agencies must be aware of the latest recruitment trends.
On 1 April 2016, the National Living Wage took effect, meaning workers aged 25 years and above are now entitled to ÂŁ7.20 per hour.
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Contents
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Welcome and Partners
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Special Feature Budget 2016 Update: What are the Key Changes for the Recruitment Sector?
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Employee Spotlight
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‘Employment rate at all time high’ reveals The Office for National Statistics
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How to Attract Top Talent to Your Business
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Recruitment Trends 2016: What are the Predictions?
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Does Bad Candidate Experience Prevent Your Business From Succeeding?
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Client News The Placement Group Expands with Acquisition
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Raffingers Foundation
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Network Your Way to Become a Top Recruiter
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The National Living Wage is Here
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Why Recruitment Agencies will Always be in
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Demand
PP
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Cloud Accounting: Why you Must Convert From Traditional Software
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Partner Perspective Planning Your Exit Strategy
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Welcome to our SPRING Newsletter It is that time of the year again, when not only do we have to get to grips with the announcements made at the Budget 2016, but we also have to ensure we are complying with new legislation. Therefore, in our Spring Newsletter we bring you a special feature on the Budget 2016, which looks at all of the key changes you should be aware of.
Raffingers Partners Gary Inglis Managing Partner gary@raffingers.co.uk
Andrew Coney Partner
In order to keep you competitive in an ever changing sector, we also look at the Recruitment Trends 2016, How to Attract Top Talent to Your Business and Does Bad Candidate Experience Prevent Your Business From Succeeding?
andrew@raffingers.co.uk
Not only this, but our Cloud Manager, Amy Townsend discusses Cloud Accounting and how this software is helping agencies to grow.
lee@raffingers.co.uk
Finally, we are excited to bring you news of our newly launched, Raffingers Foundation, which has been set up to raise money for Ovarian Cancer Action and Pancreatic Cancer Research Fund. More information about this and our upcoming events can be found on page 11.
Adam Moody Partner
As always, if you would like to be featured in our next edition, or have any suggestions for topics that you would like to see discussed, please get in touch. The Partners at Raffingers
Lee Manning Partner
adam@raffingers.co.uk
Suda Ratnam Partner suda@raffingers.co.uk
Barry Soraff Partner barry@raffingers.co.uk
Paul Dell Partner paul@raffingers.co.uk
Annual Charity Golf Day 2016 - Page 11
Budget 2016 Update: What are the Key Changes for the Recruitment Sector?
SPECIAL FEATURE
At what was described as a Budget for “the next generation” that would “back small business”, we have gathered all of the key points you need to know.
Travel and Subsistence Rules After proposing to modernise the tax rules for travel and subsistence, the government has declared that, although complex, the current travel and subsistence rules work effectively and so no further action will be taken. However, in regards to employment intermediaries, relief for travel and subsistence will be restricted. The government will introduce legislation in the Finance Bill 2016 to restrict tax relief for home to work travel and subsistence expenses for workers engaged through an employment intermediary. This will bring the rules into line with those that apply to employees.
PSCs in the Public Sector - From April 2017 Public sector organisations now have a duty to ensure that all Personal Service Companies (PSCs) they use are paying the correct amount of tax. It is thought that this will affect 100,000 people. How this will work in practice is still up for discussion; as soon as legislation is released we will publish the information on our website.
Employment Tax Employment Allowance – From April 2016 The employment allowance is a fixed deduction that allows businesses to offset against class 1 national insurance every tax year (per business not per employee). The summer budget announced two changes, which are still set to come into effect this year: 1. The Employment Allowance will be increased from £2,000 to £3,000 a year 2. The Employment Allowance will no longer be available to companies that have a director as its sole employee
Corporation Tax Corporation Tax The Corporation Tax rate will be reduced even further than previously announced, to 17% by 2020. The table below demonstrates these changes and when they come into effect. Financial Year
Corporation Tax Rate
2015
20%
2017
19%
2018
19%
2019
19%
2020
17%
Loans to Participators – From April 2016 Where a participator (shareholder) has an outstanding
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loan with a close company, a tax charge is applied, which is added to the company’s Corporation Tax Return and paid to HMRC when the company Corporation Tax is due. Previously, this tax charge was 25% on the lower of the amount outstanding at the end of the accounting period. However, in an attempt to prevent company directors from avoiding tax and NI charges by paying themselves through loans or advances, rather than dividends, from April 2016 this tax charge will increase to 32.5%. Corporation Tax Losses – From April 2017 Whilst there are a number of ways losses can be utilised for corporation tax purposes, often companies will carry a loss forward and use it against their future profits from that source of income. The good news here is that from April 2017: • Companies will be able to use the carried forward losses against other income streams and other companies within a group (if applicable) • Where a company has profits in excess of £5 million, carried forward losses offset against these profits will be restricted to 50% of the profit
For Individuals Self-employed – From April 2018
announcement of a further increase of the personal allowance. The government also announced that the higher rate threshold will rise to £45,000 by 2017. 2015-16
2016/17
2017/18
Personal Allowance
£10,600
£11,000
£11,500
Basic Rate Limit
£31,785
£32,000
£32,400
Higher Rate Threshold
£42,385
£43,000
£45,000
ISA - From April 2017 The tax free ISA limit will increase to £20,000 (currently £15,240). Furthermore, savers that are under 40 years of age will have the opportunity to invest in a new ‘flexible lifetime ISA’ and be able to benefit from a 25% bonus paid from the government on savings up to £4,000 a year. The bonus on the savings will be paid up until the saver reaches 50. The intention is to help savers either buy their first property and/or save for retirement. Savers can choose to hold a ‘regular ISA’ and/or the ‘flexible ISA’. Transfers to the flexible ISA can be made where savers have a help to buy ISA already.
From April 2018 Class 2 NIC will be abolished. For 2015/16 and 2016/17 the weekly rate is £2.80 Income Tax A typical basic rate tax payer will pay £1,000 less income tax in 2017/18 than 2010/11 thanks to the
Lee Manning 020 8418 2662 lee@raffingers.co.uk
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Employee Spotlight
‘Employment rate at all time high’ reveals The Office for National Statistics The Office for National Statistics (ONS) UK Labour Market bulletin for March 2016 reveals record breaking information…
In this slot we introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we speak to our Audit Manager, Hetal Mistry. Name: Hetal Mistry Email: hetal@raffingers.co.uk Career history: After obtaining my economics degree from University College London and after careful thought, I decided my career would follow the path of accountancy. After six years of experience with many different entities, including Baker Tilly, Felton Pumphrey and Grant Thornton UK, I joined Raffingers in January 2016 as an audit manager. Interests: I am a Liverpool fan and am lucky enough to have been at the Ataturk stadium to watch the mighty reds come back from three nil down and beat AC Milan. This was in 2005 on a cold night in Istanbul and was one of the greatest nights of my life. I also enjoy travelling. I travelled around 14 countries in Africa where I walked with lions, did the biggest bungee jump in the world and sat with Silver back Gorillas in Uganda. During my time in Africa, I taught maths at the Soft Power project for orphaned children. I also travelled to Bolivia, Peru and Brazil and was fortunate to have had the chance to complete the Inca Trail and party samba style at the Rio Carnival. Partners Report: Since joining in January, Hetal has been a breath of fresh air and is now responsible for overseeing our whole audit process. Not only this, but he has also taken on the responsibility of our internal audit training programme. Hetal has fitted into the team well and has achieved a lot in such a short space of time. We now look forward to seeing Hetal develop further within our team.
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The number of people in employment has risen by 116,000 to 31.42m in the last quarter, up almost half a million from one year earlier and the highest since comparable records began in 1971. With such a high employment rate, the race for employers and recruiters to attract and keep top quality candidates has begun. For top tips on how you can attract quality candidates to your company, please see page 7. The ONS also revealed that wage growth, which was slowing in recent months, has shot up. Employees have received a 2.1% increase in their earnings (including bonuses) compared to one year ago. It is predicted that we may go on to see wages pick up further still in the coming months. “It seems that the soft patch for wages late last year was a blip and the recent run of better data is the new norm,” said Alan Clarke, an economist at Scotiabank. “Maybe it is an early feeding in of the national living wage.” With the unemployment rate at 5.1% - the lowest it has been in a decade – and the number of people claiming unemployment benefits falling to its lowest since 1975, it would be fair to say that employers and recruiters are becoming more provident during the hiring process, ensuring that candidates are completely suitable to job roles and taking on-board employees feedback. John Philpott, director of the Jobs Economist, said: “… These figures could indicate that employers are becoming more cautious over hiring decisions as they approach what will be a ‘quarter of uncertainty’ for the economy, including the introduction of [a higher minimum wage] at the start of April and the EU referendum toward the end of June.” These findings indicate that we can expect to see the employment rate and wages growth continue to increase at a steady pace as we wait in anticipation to see how the new National Living Wage will affect the industry. *Source: Office for National Statistics and SME Insider
How to Attract Top Talent to Your Business Attracting quality candidates to your company is essential, but a huge challenge, particularly when your competitors have the same intentions as you to succeed. Therefore, you should be asking yourself, ‘what can my company offer candidates that my competitors simply cannot?’
Progression Opportunities With the unemployment rate currently at an all-time low of 5.2%, it would be fair to say that there is a high demand for workers, making it an employee’s market. Therefore, in order to attract driven and career focused individuals, promoting career progression at your business is essential. Room for growth within a job role is a quality that many candidates value. Not only does it inspire candidates, but it also encourages them to commit to your company for the long term. It is vital for any employer to reassure potential candidates that their company is one of growth and that upon hard work and determination, they will be rewarded with a step up the job ladder.
Pay Competitively It is impossible to get away from the fact that salaries are currently one of the key deciding factors for potential candidates. There must be a mutual respect
and understanding for how much you want to employ a candidate, and how much the candidate is driven to want to work for you. Be prepared to offer a competitive and generous salary as the benefit of having an exceptional candidate work for your company, bringing in large amounts of business, can outweigh the initial investment.
Offer Flexible Working In a recent survey conducted by Aon Hewitt, it was discovered that the number of organisations who offer flexible working has increased from 62% to 70% over the past year. These findings should set alarm bells ringing for employers as it would appear that this benefit is becoming increasingly popular and will soon be expected by employees. Flexible working has significant benefits for both employees and employers, having more freedom allows you to hire employees from further afield, increasing your talent pool and allowing you to meet the 24/7 needs of your customers. As the employment rate continues to increase at a steady pace, it is important that you regularly review the benefits you provide and ensure these are communicated to potential employees in order to sustain a strong and determined workforce.
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Recruitment Trends 2016: What are the Predictions? The recruitment sector is one of the most competitive sectors. Therefore, in order to attract and recruit the best employees year after year, agencies must not only be aware of the latest recruitment trends, but should also be finding ways in which they can use these trends to their advantage. To help you with this here are our key predictions for 2016.
Flexible Working 2016 expects to see an increase in flexible working schemes being used, giving employees the opportunity to work at a time and place convenient to them. Flexible working allows employers and recruiters to reach a whole new meaning of a ‘high standard’ workforce, especially as increased freedoms allow businesses to hire candidates globally, meaning there are no limitations to what you and your team can now achieve.
Recruitment Apps A massive game changer in the recruitment sector is the growing interest of mobile apps, such as ‘JobSwipe’. The idea of this dynamic, newly launched app is that candidates can conduct the job hunting process on their smart phones. Candidates can swipe left on the screen to dismiss a job opportunity or swipe right to apply for it. This is a practical, time efficient way for candidates and recruiters and/or employers to find the right match. Recruiters and employers should take full advantage of this app to entice and reach more candidates.
Video Media Online videos are now accountable for a whopping 50% of mobile traffic and 64% of all internet traffic. With this in mind, your online presence is paramount when recruiting new candidates. If you have not already considered producing a video of your company, showcasing the benefits you provide, you should do so now. Videos are eye-catching and engaging, and a great opportunity for you to put your company in front of a new audience. Another particularly powerful way of attracting candidates and clients is through obtaining video testimonials from clients, or using your employees to promote your company. This is a great way to make candidates want to be part of your team!
Employer Branding We can expect to see a continuation of employer branding in 2016. Employer branding is perhaps one of the largest factors affecting the recruitment sector because companies are spending more time promoting their culture, rather than their general corporate brand reputation. This method is an excellent way to attract quality candidates that are inspired by your company mission, vision and values.
Though these predictions are not set in stone, recruiters and employers are urged to seriously consider the predicted trends discussed. The recruitment industry is indeed one of the most competitive, and success can only be conquered if recruiters and employers stay up-to-date with the latest trends.
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Does Bad Candidate Experience Prevent Your Business from Succeeding? A recent study lead by CareerBuilder has shed light on the recruitment industry and what might be preventing you from attracting and employing the most talented candidates. The survey, which examined responses from 800,000 individuals, revealed that candidates are put off applying for jobs when they hear about bad candidate experiences. In total, as many as 78% of respondents admitted that they would talk about a bad experience in regards to a job application with a family member and/or friend. Meanwhile, 17% confirmed that they have gone a step further by posting about their disheartening experience on social media. Recruiters should be aware of the effects of bad press, particularly on social media where the news of a bad experience is permanent; unlike word-of-mouth, which although is still undoubtedly damaging, is much easier to circumvent. The survey’s findings conclude that a bad experience can range from overdrawn and unclear job applications to ambiguity of a job description. Applying for a job can be extremely stressful for candidates. Therefore, recruiters can help alleviate this pressure by communicating regularly with any potential candidates and following a succinct application process. Another way is to ensure that each job advertised has a detailed description to attract and entice the best suited candidates. 50% of respondents felt that one of the main factors
that cause a bad experience is how vague many job descriptions are. All industries are exceptionally competitive in today’s age, so holding your applicant’s interest is essential. The findings suggest that as many as 44% of respondents have lost interest in a company if the employer and/or recruiter failed to get in touch with them after applying for a job. Writing an email or communicating via the telephone to applicants thanking them for taking the time to apply for a position should be routine. It is shocking to think that some employers could be missing out on quality employees simply because of a prolonged application process and a lack of communication. It is important that recruiters try to limit these issues and have a clear job description for any role. In this way more sustainable and stronger workforces can be built.
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The Placement Group Expands with Acquisition CLIENT NEWS
The Placement Group has acquired Primary Care Recruitment (PCR) for an undisclosed sum, following agreement on a new six-figure funding package with Clydesdale Bank. The Placement Group provides permanent, temporary and flexible staffing services across a range of medical specialties to both NHS and private sector healthcare organisations. PCR operates throughout Europe, primarily sourcing nursing personnel and other healthcare professionals for European healthcare markets. Its European representatives are based in a number of satellite locations which are supported by a network of multilingual account managers. The acquisition of Dublin-based PCR’s 25 staff members sees numbers at The Placement Group increase to approximately 100. The Placement Group finance director Simon
Goldsmith said: “The acquisition of PCR provides the group with a number of benefits, strengthening our existing offering within the UK and enhancing our ability to extend our reach into the European healthcare sector”. In addition to the supporting six-figure funding package, the deal also sees an increase in the group’s existing invoice finance facilities with Clydesdale Bank. Clydesdale Bank’s business & private banking centre head George Eleftheriou said: “The Placement Group has established an excellent reputation for the high quality of its services to the UK healthcare sector. This acquisition enables the group to expand into Europe and we look forward to supporting them as they realise their vision for the business”. The Placement Group provides healthcare recruitment services.
For further information please contact: The Placement Group P: 0845 230 6666 E: contact@tpgplc.com A: Wellington House, Hertfordshire, EN8 7HF
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specialist
Raffingers Foundation We are delighted to announce that we have launched Raffingers Foundation in order to raise money for Ovarian Cancer Action and Pancreatic Cancer Research Fund, two charities very close to our heart. The Raffingers Foundation has been created in memory of Jason Kew, a dear husband and friend, who sadly lost his battle against pancreatic cancer, as well as to honour those family members of the firm who have been lost to ovarian cancer. For these reason, funds raised by the Foundation will go towards scientific research and specialist staff and equipment, helping to put a stop to the number of women and men suffering and dying from these terrible diseases. More about the charities Ovarian Cancer Action, a charity that strives to stop women dying from ovarian cancer by funding worldclass scientific research leading to innovative treatment and progressive solutions. Pancreatic Cancer Research Fund, a national charity dedicated exclusively to supporting research to improve diagnosis and treatment of pancreatic cancer. We have many events organised throughout the year to support these great causes. All of the money raised will be split equally between the two charities. All of our upcoming events are listed opposite; we would love for you to get involved.
Upcoming Events Nuclear Races Date: 15 May 2016 Eight members of the Raffingers team will be tackling a 12km, muddy, obstacle loaded farmland to raise awareness and money for ovarian and pancreatic cancer. Annual Charity Golf Day Date: 30 June 2016 Venue: Toot Hill Golf Club Not only will this be our tenth Charity Golf day, but it will be the first Golf Day we hold in aid of Raffingers Foundation. Back to School - Football and Netball tournament Date: 7 July 2016 Venue: West Hatch High School Submit a seven a-side team to take part in our football and netball tournament in July.
For further information or to get involved with any of our events, contact: Danniella Cross 020 8418 2709 danniella@raffingers.co.uk
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Network Your Way to Become a Top Recruiter The recruitment sector is one of the most competitive sectors, which means in order to attract clients and quality candidates recruiters have to make themselves stand out. The key way this can be done is through networking, both online and offline. Through effective networking recruiters can transform themselves into leading industry experts, gaining the trust of their candidates and clients. Enhance your networking through:
Social Media / Online Presence Do you have a large online presence? Is getting in touch with you straight forward? If the answer to any of these questions is no, then this is definitely something that needs looking into. In today’s society, the use of social media is a crucial part of most individual’s day-to-day lives, particularly on platforms such as LinkedIn, Twitter, Facebook and Google+. Social media accounts allow you to touch base with current candidates and clients, whilst also reaching out to prospects. However, being on social media is not enough to give you an online presence. Instead, make sure you are involved and aware of what is going on in your sector. Share information, join relevant groups, comment on informative posts and write your own content. Through doing these things on a regular basis means anyone searching for you can be confident that you are active in the sector, and are ultimately going to be of benefit to them.
Elevator Speech Another factor that impacts the way you are seen by clients is the way in which you sell yourself at networking events. For example, have you prepared your ‘elevator speech’? If you have not heard of this terminology before, then simply put, the elevator speech is the idea that your pitch should last the approximate time it would take to reach the tenth floor of a building in an elevator. At any event you should always be prepared to answer the following: • Where do you work? • What is your job role within your firm? • What does your firm do? Your answers need to excite the person you are speaking to and not come across as rehearsed or rushed; this is an opportunity for the person/s you are conversing with to see your potential and buy into what you are selling, so it needs to sound natural. Make sure these people remember you and ensure you exchange business cards
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and stay connected afterwards.
Reconnect After attending a networking event, make sure you reconnect with the people that you exchanged business cards/contact information with. Build a good rapport when reconnecting with these people by always referring to a topic that was covered in your conversation the last time that you spoke. Remember that everyone likes to feel heard. This builds up trust, and once you have someone’s trust they may feel more inclined to refer you. Ultimately, this will suffice as a large contributing factor to generating a larger client base in the future. It is recommended that you touch base with these people by a simple email or call once a month. To conclude, your status and reputation within the recruitment industry relies on how you network and market yourself. Following these guidelines will put you in great stead to becoming a top recruiter. In order to succeed, remember to be approachable, reliable and knowledgeable.
The National Living Wage is Here On 1 April 2016 the National Living Wage (NLW) took effect, which means employers now need to pay any workers aged 25 years and above a minimum of £7.20 per hour (50p increase).
under the age of 25. The current NMW rates are:
The NLW is not a choice and will be enforced as strongly as the current National Minimum Wage (NMW), which means you could face fines, prosecution and ‘naming and shaming’ for failing to comply.
• £3.87 for under 18s
It is important that you are aware of how these changes will affect your business as not only will they mean a higher wage bill for you, but in some circumstances can affect pension contributions and the eligibility of your employees. Please note that the NLW is not replacing the NMW and the NMW will continue to apply for those employees
• £6.70 for 21s and over • £5.30 for 18 to 20-year-olds • £3.30 for apprentices (the rate applies to all apprentices in year one of an apprenticeship, and 16-18 year old apprentices in any year of an apprenticeship)
Suda Ratnam 020 8418 2681 suda@raffingers.co.uk
Why Recruitment Agencies will Always be in Demand For many years it has been said that the strong growth being experienced in the recruitment sector is unsustainable and a decline is surely going to happen. This was predicted due to the increase in job boards, internal recruitment departments and social networking making it easier for companies to recruit directly. However, this decline has never happened and the sector continues to go from strength to strength. Here is why… On most occasions, cutting out the middle man is advised in order to ensure a quality service in a time efficient manner. However, in this scenario, the middle man is the recruitment agency and they are the ones with the power, not only to find the best suited and most skilled candidates, but also to make those candidates hireable. This process means businesses do not have to sift through hundreds of irrelevant CVs, saving them a tremendous amount of time and effort. Indeed, in can be argued that in-house recruitment departments can do the same job if time is the only issue, but recruitment agencies are able to go one step further and also provide their candidates with the privacy and confidentiality they desire. An issue with many job boards, the main recruiting tool used by in-
house recruitment departments, is that CVs are on show for all to see. Many candidates are deterred from using job boards because of this reason and so will often turn to recruitment agencies who understand the importance of discretion. The above combined with the fact that many agencies now specialise in particular sectors or employee levels, means that companies can gain access to a greater pool of talent through using agencies, receiving potential candidates that are knowledgeable about their sector and, most importantly, can add value to their business. In addition to helping in the recruitment process, agencies have evolved over the years and many now offer support to candidates once they are placed. This means that if a candidate is not performing as desired many agencies now deliver additional training, enabling businesses to look more towards the long term and developing a candidate’s skills rather than dismissing immediately. Recruitment agencies continue to take away the stress of recruiting and through enhancing the support they provide ensures they remain integral to the recruitment process of any business.
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BLOG
Cloud Accounting: Why you Must Convert From Traditional Software
Cloud accounting has taken the business world by storm, but why is this and why is the software so popular amongst small to medium sized businesses? With four years of experience using cloud accounting, I explore the features that make the software so appealing to accountants and businesses alike.
Flexibility Cloud accounting gives you the ability to run your business from anywhere in the world and from any device. Through having access to up-to-date financial figures wherever you are, you are able to regain control of your business, keep on top of your finances and not be caught out by any hidden surprises. Unlike traditional accountancy software, you have the freedom to access your accounts at any time, not once a year when your year-end has been processed. I have witnessed first-hand how beneficial this is to businesses – improving their efficiency and helping them make the most of opportunities.
Bank Feeds Automatic bank feeds are the key behind cloud accounting. Through linking your business account with the software you can reconcile invoices immediately and get a real time view of your business finances.
Multiple Accesses This is a great benefit that allows for collaboration. You can decide who has access to your software and what they can see. Through multiple accesses you can also share your data with your accountant. This is a great feature for us as it allows us to spot any discrepancies immediately, provide accurate forecasts and, ultimately, more relevant advice as we can see instantly what is working, what is not working and
what can be done to help you grow.
Add-on Software Whatever your business needs, there is no doubt that there will be an add-on for it. With hundreds of cloud accounting integrated applications available, you can easily find add-ons best suited to meeting your businesses objectives. A few of my favourite include: • CrunchBoards – CrunchBoards work alongside Xero, providing users with complete clarity of their data. What makes CrunchBoards so valuable is that every transaction from the beginning of time can be imported, which means absolutely any KPI can be looked at in real-time for operational, retrospective or future analysis. And, if anything is amiss, you will be the first to know • Receipt Bank – Receipt Bank extracts the key information from your bills, receipts and invoices, removing the need for manual data entry. Receipt Bank can then publish the data to Xero or it can be downloaded as a spreadsheet or used to create expense reports. • Chaser - Chaser allows you to reduce your debtor days and gain a financial boost through automating the process you use to chase invoices. Through integrating with Xero you can set the chasers you want your customers to receive at different points until the invoice is paid.
Easy Invoicing Cloud accounting software is synonymous with quick and easy billing. You can produce invoices quickly on cloud software, ultimately promoting better and improved cash flow.
To find out how Cloud Accounting can benefit your business, please contact: Amy Townsend, Cloud Accounting Manager 020 8418 2690 / amy@raffingers.co.uk
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Partner’s Perspective
Planning Your Exit Strategy
Building a good business is one thing. Knowing when it is time to sell it is an entirely different matter. For many entrepreneurs it is not enough to build a business, they have to make sure they have an exit strategy, a way to get the money back out, too. Depending on whom you are and what kind of business you have, an exit strategy may mean something completely different to you compared to somebody else. Therefore, you must consider whether you plan to exit for retirement or to move on to your next venture. Without a proper exit strategy, you risk losing some of the value that you have created or you could miss the perfect opportunity to sell your business as a result of being unprepared. Here are a few things to consider when creating your exit strategy.
to pass your business on to the next generation. In order to do this you may need to set up a family trust so that you can structure the transfer of ownership to your children in an appropriate manner. Another option may be to wind the business down, extracting cash over a period of time and eventually just close the doors.
Timing Only you will really know when it is time to exit your business. You may feel you have had enough, are too old or perhaps just ready for your next challenge. You may see the potential to expand into other markets and need to find a way to fund that opportunity. Regardless of when you are ready to sell, make sure that the timing of the sale is right for the market. You should also build enough time into your plan to allow for professional advisors to complete due diligence, etc.
The Right Team
Building a good business is one thing. Knowing when to sell it is an entirely different matter.
Options Consider the various options that will be available to you. You can sell the business outright and move on. Another option might be to list the business on the stock exchange through an Initial Public Offering (IPO). This would allow ownership of the business to transfer to shareholders but you probably would not be able to walk away immediately. Perhaps you want
Consider the team of advisors that you will need to successfully complete the transaction. The business will need to be valued; you will need tax and legal advice. There will be lots of administration required and you may also need to consider financial planning to create appropriate structures to manage your wealth as a result of the sale.
Cost Regardless of the type of exit strategy you choose to develop, there will be an element of cost to consider, such as professional advisor fees, tax bills or transaction fees. Make sure that you have enough cash provisions to cover these exit costs. For further information please contact: Barry Soraff 020 8418 2663 barry@raffingers.co.uk
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