Feeling unprepared for retirement? Read on.
An aging Australian business population caught up in day-to-day worries are overwhelmingly unprepared for their looming retirement, according to recent research.
The percentage of Australian business owners approaching retirement age has close to doubled in the last three years, according to a recent Marketing General Incorporated survey, and currently sits at 37 per cent.
Added to this, a third of business owners are entirely reliant on the sale of their business to fund their retirement, and three quarters do not have any succession strategy in place.
Craig West, CEO of Succession Plus and president of the Australian chapter of Exit Planning Institute, says these statistics are concerning, but not entirely surprising.
“Given that many business owners spend the vast majority of their time day-to-day actually running the business (red tape, bureaucracy, compliance and regulation have made that far more demanding and far more time-consuming than perhaps was the case 20 years ago) then they don't have the strategic focus required to implement such a strategy."
Business owners need to start to see exit planning as a key aspect of managing their business, and not something to be continually knocked down the to-do list, says West.
“Many advisers in this space also need to understand that a business succession or exit plan is not a project or document – it is a process and that often takes 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”.
For the business owner, the comfort and certainty provided by a definite and defined process towards an exit may be the trigger needed to allow them to commit to the decision, says West.
“In terms of national wealth several recent research studies have estimated the value of privately held business in Australia to be something close to $3 trillion and if the exit and succession plan for those business owners is not managed correctly that wealth simply evaporates and disappears.
“This challenge if not met will lead to a significant retirement funding gap for a large number of baby boomers approaching retirement.”
