Building a successful business doesn’t happen overnight.
A successful business is a product of dedication, sacrifice, humility and hard graft.
After years of investing a great deal of time and energy into your business it’s fair to assume it will be worth something when you decide to hang up your boots.
Or will it?
"My business is my super" is a phrase I hear often, yet I find people overestimate how much their business will be worth when they retire.
More pointedly, they often haven’t put in place the safeguards needed to ensure the business will deliver financially when it’s time for them to retire.
When the time comes, will your succession plan (if you have one) allow you to take a step back so others can do the work while you enjoy your retirement?
Will your profits allow an increase in wages to support you in taking a step back?
Do you have someone in mind to take the reins? Will they be happy to run the business for 30 years without an ownership stake? If they do leave, who will step into that role?
Alternatively, you might plan to sell the business.
Who is likely to buy the business and at what price? Will it be paid as a lump sum or vendor financed?
How much tax will you pay on it? What ownership structure should the sale proceeds be invested through? What assets should the sale proceeds be invested in?
Most importantly, do you have a clear idea of how much money you will need to retire and whether the sale of your business will achieve it? Blog: How much do I need to retire?
If you have the answer to these questions, great. If not, consider thinking about it in advance.
Just like building your business, retirement preparation isn’t going to be an overnight success.
But it’s not all bad news.
People often underestimate how much they can build up in super over the last 10 years of work, even when starting with not much.
Written by Dallas Davison.
Dallas Davison, Michael Hogue and Ali Hogue.