- Published on 23 Feb 2023
- - What is Financial Planning?
Many business owners overlook the importance of superannuation and instead reinvest their spare funds into their business, hoping to sell it at a premium when it's time to retire. However, this exit strategy can be very risky, as finding a buyer who is willing to pay the desired price can be challenging. This is especially true for farming businesses where passing the farm to the next generation may not generate enough funds to support the older generation's retirement.
To avoid this risk, it is essential to plan ahead. Business owners should consult their accountant or business advisor to determine their business's current value and what they can do to improve its value to a potential buyer. They may need to use state-of-the-art accounting and software systems and have a clearly documented operations manual to make the business more attractive to buyers.
An independent assessment of the business's potential sale price should also be undertaken to avoid overestimating its value. If the business is not likely to generate enough funds to support the owner's retirement, they may need to consider other options, such as making strategic acquisitions, taking on a junior partner, or boosting their superannuation contributions during the final years of running the business.
Increasing superannuation contributions can reduce tax liabilities and provide a healthy nest egg, which can help negotiate extended payment terms and reduce the pressure to obtain top dollar for the business. A realistic and well-planned approach to retirement and the sale of the business can provide much-needed breathing space and a more comfortable retirement.
Why not take the next step and talk to a qualified SMSF financial planner?
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you as a small business owner, approaching retirement .
If you would like to discuss your current Superannuation position or wider financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.
Alternatively, please make an appointment using our online Book an appointment (Blue button above)
LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.