Many investors chaff at the notion of sitting on “idle dough”; there’s a strong temptation to “do something”. But being liquid – and patient – proffers the opportunity to make the right investment decision at the right time.
Seniors’ organisations could struggle to get a fair hearing from an incoming Labor Government that largely has younger women, migrants and the tertiary educated to thank for its stunning victory.
Owners fear retirement means loss of family business: NAB report
About half of all small and medium-sized business owners fear retirement will mean the closure or sale of their business rather than its transfer to a family member, according to analysis by NAB, the nation’s largest business bank.
But only one-third have devised a retirement strategy, or considered the complex tax, legal and family issues involved in finding a successor or selling the business to someone outside the family, the analysis shows.
Ivano Simonutti, national general manager NAB Private Wealth, says many business owners are too mentally and emotionally involved in the day-to-day running of business to take time out to consider succession.
Kim Venter (pictured), director of family business and advisory for the wealth management firm JB Were, adds that the dynamics of families and complexity of businesses means that a minimum of two to five years is recommended. She adds: “No-one ever started too early.”
The NAB survey also found family members who might have traditionally taken over a business increasingly want to pursue their own careers or feel running a family business is too much work.
Michael Saadie, also a NAB Private Wealth executive, adds: “Next-generation family members may have career aspirations in new and evolving industries or face growing complexities of managing a business in an increasingly competitive landscape.”
The nation’s 2.6 million small businesses, which typically employ fewer than 20 people, account for more than 97 per cent of enterprises and about 33 per cent of gross domestic production, according to government analysis.
NAB’s survey, undertaken with the global market research consultancy CoreData, identified key trends affecting succession issues at a time when the economy is being transformed by an ageing workforce and increasing numbers of retirees.
About half of the business owners surveyed are over 50 and more than 20 per cent are within five years of retirement.
It found that nearly half of small and medium-sized business owners expect to continue working after they turn 67 for reasons ranging from the financial necessity through to the sense of purpose and relevance that comes from working.
Other surveys have found about 70 per cent of transfers of intergenerational wealth fail because of family conflicts, misaligned family values, delays, waste and bungled transfers.
“Make sure the family business it is set up for an exit,” says NAB’s Simonutti. “That means identifying and preparing a successor by establishing clear objectives, readying for potentially complex capital gains and tax issues while maintaining business continuity. In addition, there needs to be a thorough valuation of the business,” he says. “What is it actually worth?”
Experienced legal and financial assistance should be sought to advise on strategies for transferring the business, which can range a sale through to transfers using trusts, private companies or self-managed super funds.
Venter adds succession planning often involves setting up a family council or advisory board that sets out a mission statement, or charter, helping to define roles and distinguishing business from personal issues.
Saadie adds: “Too often the focus on wealth planning is overlooked, addressed too late or put in the ‘too hard’ basket. But failure to plan can put both their business and personal wealth at risk,” he says.
For example, small business owner Joe Rinaldi, who had a Mazda dealership in Sydney’s northern beaches, decided to sell his business after realising the red tape, expense and complexity required for family members or business partners to take over.
Rinaldi recommends small business owners start planning years from retirement by discussing various scenarios with family members, or an experienced accountant or lawyer.
