The lack of retirement preparedness by small business owners continues to be a major concern, according to Craig West, founder and chief executive officer of Succession Plus.
West said Australian business owners, whose average age is 58, were delaying retirement hoping their enterprises would regain lost value following the global financial crisis (GFC).
According to the MGI Australian Family and Private Business Survey released in June this year, 75 per cent of business owners admitted their business was not sale- or succession-ready, with more than half saying they did not intend to do anything about it in the next 11 months.
Many, West said, see themselves working beyond 65 years of age.
"For many Australians the family home is their greatest asset — but for SMEs, their business may well be their largest asset. So selling a business demands a strategic long-term approach: ie, a vision for the future broken down into the steps required to achieve that objective," he said.
"Therefore to maximise the value and potential, the exit plan is required to be implemented well in advance, allowing time for a smooth transition and any unforeseen contingencies."
On a financial level, a well-planned business exit will not only enable the SME to attract a higher sell price, it will also help minimise tax on the proceeds — using staged payments, superannuation contributions and taking full advantage of tax concessions.
"The owners that have started to plan their exit from the business will have a much better understanding of its value and can tidy up loose ends in readiness for sale and be much better positioned to take advantage of opportunistic offers," West said.
"And finally, if an owner does have to exit the business unexpectedly due to poor health or other issues, the further the exit plan has progressed, the better the outcome is likely to be for them and their loved ones," he added.
"A poorly planned or poorly executed succession will often lead to disputes, poor customer experiences, business decline and financial pressure."