Australian small businesses represent a retirement income challenge in circumstances where 33 per cent of small business owners have said they are entirely reliant on the sale of the business for cash to fund their retirement, yet 75 per cent do not have an agreed or documented succession plan.
That is the analysis of Exit Planning Institute Australian chapter president Craig West, who has cited recent MGI research revealing the percentage of business owners in the 60-to-69 year age bracket has increased by 16 per cent in the last three years from 21 per cent in 2010 to 37 per cent this year.
As well, the research found that 58 per cent of family business owners had indicated that the younger generation was not interested in actively managing the business.
"Any business, financial analyst or commentator would see the inherent danger within these numbers and that is simply that there is an increasing number of people approaching retirement age who are badly prepared for succession or exit, but whose retirement funding will be at least partly and in many cases entirely dependent on them achieving some level of successful exit strategy," West said.
He said advisers working in the area needed to understand that a business succession or exit plan was not a project or document, but a process and that could often take anything from 18 months to 5 years.
"In fact the most successful exit strategies have been implemented at least 3 to 5 years prior to exit," West said.