There is a myriad of reasons why you might be selling a business. Many business owners not only fail to draw the full value for their business, but they struggle with the timing when they want to retire. The main reason for this is that they have failed to plan or create their exit strategy.
As a financial planner of over 20 years Brad Lonergan from BMK Financial Services suggests there are several things you can do when selling a business to improve the financial outcome for your business and your family.
Risk protection strategies (pre-retirement)
“I often hear stories of business owners that had set a date for retirement having to prolong their working life due to the unexpected. Our Risk Protection Strategies can provide protection if you, your family, or another valuable employee suffer a serious debilitating health issue or die suddenly. We’ll show you how to protect your business against an event like this so that your retirement is not delayed and you plan is kept under control.”
Superannuation accumulation strategies (pre-retirement)
“The common question I get asked is ‘how much is enough for me to retire comfortably?’ It’s an all too common question, but the answer is never simple. The reason it’s not simple is that everyone has different goals, needs, and expectations of what their retirement should look like. Therefore, until you sit down and have that honest one-on-one discussion with a retirement planner like me, you will find it difficult to answer this question. I have 20 years’ experience assisting people to do just that, and a master’s degree that’s taken me many years of study to attain.
Most people just bounce along without a plan and consequently don’t get to retire when they want to. If we can assist you to put the correct amount of super away each year in the correct type of investment, paying the least amount of tax, then we can usually predict within a year or two when you will retire, and roughly how large your superannuation asset will be. Wouldn’t this be good to know well before you retire?
As a member of Lake Macquarie Business Hub, we can work collaboratively with your accountant, lender, or legal representative to give you the absolute best outcome for your super investments.”
Retirement planning and income transition strategies (pre- and post-retirement)
“Many business owners find it really hard to pull away from their business. There are numerous reasons for this including not knowing the best time, not being able to afford to do so, not letting their long-term clients down, no-one they trust to take over, or not knowing what they would do without their work. Having a proper plan in place can help you avoid all the excuses for not retiring when you really want to.
A good planner doesn’t just consider the financial impact, they also consider the emotional impact, and the affect on the extended family and/or business partners. It’s important that your transition is as smooth as it possibly can be, and this can’t happen unless you sit down and discussed all your expectations and work out what is realistic. You also need to know what will really satisfy your goals, wants, and desires. A financial planner can help you work through this and come up with a realistic plan that will give you a reasonable time frame that you, your business, and your family can work with.”
The unexpected retirement or business sale – death, disability or divorce (pre- and post-retirement)
“Sometimes in life, no matter how much we plan, our choices are made for us. It’s true that things in life don’t always go to plan. The three Ds (death, disability and divorce) are often reasons business owners are forced to sell up or retire early. Sometimes it may mean that the loss of assets can force you to have to work a little longer. It happens a lot these days.
Statistics tell us that 50% of marriages end in divorce, and one in three of us will experience some form of cancer, heart attack or stroke before we reach retirement age. Having a financial planner by your side can help if these events occur. A planner can cut through the emotion and give you a realistic plan as to how and when retirement from your business may be possible.
If retirement has been forced upon you and you are selling a business, then the allocation of funds becomes paramount from a taxation, asset, and income perspective. This time is usually critical as we find that those that don’t implement a plan after these events often squander their assets quickly and prolong their working lives. With a well thought out plan or strategy they may have been able to structure the business and personal assets in such a way that they could retire immediately, or in the near future. Sometimes it just takes another person’s perspective to see your situation in a whole different light.”