Employee to MD - advice please!

Hi all

Long time lurker, first time poster.

Having been an employee of a (less than 10 employees) Ltd company for 15 years, due to the retirement of the current MD (my father) I am now in the position that in the coming months I will become MD and majority shareholder.

A big step, but I know the business and the loyal staff well. Most of our business is export and we have ridden out the recession. A bit rough for a few years but broke even in 2011/2012, made a small profit in 2013 and the first 6 months of this year are already better than this time last year - some further new business and opportunities about to come to fruition in the near future also, in short, I'm cautiously optimistic.

I already have some cost cutting ideas for example. What I'm looking for is any pointers/advice from anyone who has been in this position: PAYE to MD.

For the moment I'm thinking mostly from a personal finances situation - e.g. I realize that I will lose tax credits and will need to bump up my salary a little to compensate. I realise the implication for contributions/jobseekers.

Just looking for a few dos and don'ts maybe from the more experienced here?

Thanks

I really hope that you have dealt with all the CAT / CGT issues with your professional advisors. Have you been involved in the running of the company for the last few years in anticipation of the hand over.

I think that depending on the relationship that a founder has with the customers and suppliers had with the outgoing MD will dictate a lot, some have a long standing relationship with the person and some work needs to be done on managing the changeover.

I often find that the younger person has lots of systems that they learned in college whereas the founder just did it their way because at the time that was the best way.

Best advice is if your not finance minded talk to your accountant about setting up even a simple headline figures report for yourself so you can focus on getting the systems in place the way you want them and keeping an eye on finances.

Don't be afraid to ask for help from advisors, sometimes an external advisor will give a different view on this and at a time of change it could be a good opportunity.

Best of luck.

Thanks for the response

Joe_90 said:

I really hope that you have dealt with all the CAT / CGT issues with your professional advisors.

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Can you expand a little on this?

Have you been involved in the running of the company for the last few years in anticipation of the hand over.

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In a word, no.

I think that depending on the relationship that a founder has with the customers and suppliers had with the outgoing MD will dictate a lot, some have a long standing relationship with the person and some work needs to be done on managing the changeover.

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It won't be clean immediate break - it will be gradual. I am ( and have been for some time) the main point of contact for any and all customers/suppliers.

Best advice is if your not finance minded talk to your accountant about setting up even a simple headline figures report for yourself so you can focus on getting the systems in place the way you want them and keeping an eye on finances.

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Our bookkeeper (who is close to retirement herself) will still be on board - with approx. 30 year experience.

Don't be afraid to ask for help from advisors, sometimes an external advisor will give a different view on this and at a time of change it could be a good opportunity.

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Sure, will do - thanks.

Best advice I can give you is to get monthly management accounts. This will give you a real time snapshot of how the company is performing and you will be able to react accordingly should you need to make any changes.

With any half decent accounting package it is possible to get weekly or even daily figures.
Monthly is just simply too infrequent.
The key figure in any sales business is the aged debtors ledger and what the process is for bad debts.
In this area you need to know what the old man's attitude was to "slow payers"

Depending on the business: stock control and shrinkage needs to be tightly controlled