Health and Safety has a much bigger influence on the sale of your business than you might realise. I think it’s one of the most important aspects of selling your business today – having a robust health and safety plan can mean the difference between closing the sale on your business or losing that perfect buyer.
In a previous blog, I talked about the influence Generation Y has on selling your business in the next 10 years. For many, this is something to worry about in a couple of years. There’s a much more immediate threat when selling your business right now: health and safety. Many business owners feel this out of control and are worried it will only get worse, to the point they don’t want to comply because of bureaucracy, or they can’t afford compliance cost.
Certainly, in New Zealand, health and safety rules have been tightened significantly over the last few years. And – just when you thought you were compliant – new rules came out. Suddenly, you are personally liable if something happens to one of your staff, even in cases where you would think common sense might prevail. Health and safety has become one of the fastest growing professions in New Zealand: why? Because it’s gone from a ‘best practice’ situation for business owners right up to a ‘must have’ scenario. Quite simply, if you don’t have a current health and safety plan in place for your business, you are not only risking your operation in a legal sense, but you’re also removing yourself from any possibility of gaining a good sale price for your business.
Wondering how to attract serious buyers for your business?
Health and safety plans attract buyers! Just to be clear – this article isn’t about how to create a health and safety plan for your business. There are health and safety experts in your area who will be able to give you sound advice for your business; I’m simply outlining the importance of having an up-to-date H&S plan in place for your business if you’re considering taking it to market. This is a very similar message to my earlier post about having modern technology systems in place within your business processes: and if you’re not considering keeping your business up to speed with technology or health and safety, then you really need to consider getting out now!
The time is fast approaching when businesses will not be saleable without a robust, comprehensive health and safety plan in place.
Recently I sold a business with a basic Health & Safety manual. They needed that manual for only one particular client, operating in the forestry industry. Without that manual they would lose the client, and 25% of its turnover with it.
12 months on, the new owner has improved the manual, updated the H&S systems and procedures. This meant they could chase bigger and better jobs with higher value customers. That manual is now needed for 80% of their clients. The IP of their business is now in their Health & Safety manual.
Growing your business: health and safety plans that attract new clients
In fact, part of my role in business sales is to educate and assist my clients with advice on how to future proof their business for maximum profitability. Having a strong, existing health and safety plan in place for your business gives a framework for any new owner to build on, while increasing the attractiveness of the sale.
Robust health and safety plans are extremely attractive to potential business purchasers, as the increased risks with regards to health and safety in NZ are making many business owners nervous – and highly aware of the possibility of fines and infringements. In fact, not having a health and safety plan in place can even impact the new owner’s ability to attract good staff – a very real concern. The health and safety laws in New Zealand have significantly increased operational costs for businesses too, everything from increased costs for staff training, compliance costs, anti-bullying programs, signage and health and safety equipment all add up very quickly. Having a H&S system in place simply gives any potential buyers peace of mind when valuing the operations of the business.
Whether we like it or not, health and safety regulations are here to stay. Some say this is only the beginning of the increased responsibilities being placed on NZ business owners. Without a strong health and safety system in place, your business could be worthless to a new owner – mainly because the cost to make the business compliant can easily outstrip the asking price or it’s valuation.
Save yourself a lot of effort in the future – get a health and safety plan in place NOW before your business loses customers, staff, and value! Give me a call today for more realistic advice about the sale and purchase of businesses in NZ.