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So how are you planning to exit?

Interested in a succession plan that will deliver maximum value and minimum headaches?

Wednesday, August 20th 2003, 2:08PM

Strategy 1.

Recruit one or more sales people into your organisation with the view to increasing revenues in the short-term and ensuring you have a successor to buy the business from you in the long-term.

Disadvantages

  • No guarantees that the person/people you hire will make good sales people.
  • Significant costs may be incurred if they don’t make the grade.
  • Lost revenues due to the time you are taken out of the business training your new recruit(s).
  • Strategy 2.

    Plan to sell your client base and exit the business.

    Disadvantages

  • Reliance on demand being strong at the time you want to sell. If there is an abundance of client bases available and a shortage of buyers at the time that you want to sell then your return may be diminished.
  • Strategy 3.

    Plan to retire and live off your renewal income.

    Disadvantages

  • Unless your client base is actively serviced the law of diminishing returns will apply here. The more time that passes, the more clients you will lose to other advisers who stumble across your clients.
  • The leap from upfront commissions to renewal commissions overnight is very difficult to adjust to – in fact renewal commissions may not generate sufficient income to retire on at all.
  • Club Life Strategy

    Recruit someone into your business that is already fully trained and has a demonstrated success record to bring to your business. Someone who has chosen this industry as a long-term career and who brings the added bonus of a modest client base and renewal income stream with them.

    Increase your passive income by steadily spreading your new business over products that generate higher levels of renewal income. Get off the tread-mill of chasing upfront commissions progressively. Plan to have increased your passive income significantly in time for your targeted retirement.

    Sell your significantly enhanced client base to your successor or alternatively retire off your passive income, and pass the new business generation on to your successor.

    Advantages

  • “No risk” recruitment
  • The increased ‘passive’ income provides the option to either sell the business for a much higher price or to retire on substantially higher levels of renewal income.
  • With a successor in the business client fall-off should also be minimised.
  • Want to know more?

    Talk to Club Life – We know it’s in our interests to help you to retire happy!

    This advertorial content was provided by Club Life

    « Lumley Life for sale - againUnderstanding the insurance market »

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