Retirement planning to remove stress
Figuring out what to do with your business once you retire is a huge cause of stress for most business owners. Hear how Graeme helped this owner with retirement planning so that the transition went smoothly.
Based in central Newcastle, this maintenance services business offers repair and install service to customers in the Newcastle, Hunter Valley, Central Coast and Port Stephens regions. Established in 1989, the business has slowly grown over the years, with many difficult periods caused by small independent operators setting up ‘one-man’ businesses and undercutting with low prices (but never delivering the quality of service).
By the 2000s, the business had developed modest profits that supported a team of 15 people and generally were one of the major suppliers to their sector. This profitability led to the ability to secure their own facility and start to invest in securing a comfortable life post-retirement. Like many business owners, the business had taken up much time and energy without being able to put a lot away for retirement.
The owner realised that at the age of 56, he needed to make significant changes to the business so that at the time of retirement he wouldn’t have to close the doors and walk away due to the business being highly dependent on him for its operation.
In May, following a ‘business diagnostic’ showing more than $70k of potential profit leakage and more than $30k in one-off cash recovery, Graeme started working with the company to help improve the profits, growth and value of the business and ultimately allow the owner to step back from operations.
- Owner nearing retirement and still heavily involved in day-to-day operations
- High level of debt and no plan to eliminate
- No plan for continuation of the business once owner retired
- Profitability of business not enough to secure comfortable retirement
- A large amount of cash tied up in business due to delay between job completion and payment
- Retirement planning
- Identifying the ideal client
- Implementing a regular stock-take policy and re-stocking of service vans
- Utilising the job management system to monitor progress of each job
- Introducing an accurate monthly financial reporting system
- Establishing a benchmark cash collections policy
- Commencing a complete assessment of parts spares stock to improve service and efficiency of the parts management process.
- Improving the flow of information between support staff and field technicians
- Focusing on each team member understanding their role in helping the business to run smoothly
- More effectively utilising technology for job management
- Questioning the charge rates for supplied parts
- Eliminating high cost external providers
- Improved financial returns from the business of more than 200%
- Front office able to operate without owner on site
- Time from starting a job to payment reduced significantly (less money tied up in the business)
- Technicians able to offer greater value to customers
- Established a firm foundation to allow General Manager to step back from day-to-day operations of the business
- Retirement planning meant the business is positioned to continue operation following owner’s retirement
If you’d like to talk to Graeme about retirement planning or any other aspect of business please contact him here.