Exit strategy vital for family businesses
FAMILY businesses account for around two-thirds of all businesses.
The typical Australian family business owner is now a 55-year-old baby boomer, getting close to retirement.
Many want to pass on their businesses to their children but the chances are that, with their own careers and their own lives, the kids might not be thrilled at the prospect of following Mum or Dad into the family business.
By the time they realise that the kids aren't interested, it's often too late to start planning another way to exit, and the value of the business (and what they can do with their retirement) is greatly diminished.
After seeing 12 businesses go into liquidation in two years because their owners didn't have them ready to hand over, Sydney insolvency expert Antony de Vries has created a handbook to help business owners plan for their exit.
Life after Business is a no-nonsense, easy-to-read book that gives business owners the information they need to achieve their ideal retirement - regardless of whether the kids want to take over not.
The guide goes through every stage of business succession planning from deciding it's time to exit and working out how much you need to fund the lifestyle you want, to how to do it.
Making sure you have the right business structure before you sell is one of them.
Say the kids don't want to take over, and you're in the terrific position of receiving a good offer for a potential purchaser. If the business is run as a private company, you're ineligible for the 50 per cent capital gains tax concession available to individuals and trusts. That's a big hole in your retirement fund.
The book tells of a business for sale with assets valued in the tens of millions of dollars, with an asset register that was out-of-date. The business owner lost between $3.5 and $4 million at the sale as the purchaser wasn't prepared to pay for assets that couldn't accurately be accounted for.
I recommend it highly - full details are at www.lifeafterbusiness.com.au
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: firstname.lastname@example.org.