It’s hard to let go… but bosses must start planning for retirement
WITH a third of bosses of small businesses aged over 60, it is vital they start planning their exit strategy well ahead of retirement, experts warn.
Accountancy firm Moore Stephens said many directors put themselves at a disadvantage when it comes to leaving as they are busy running the firm and underestimate the time needed to get things in place. It said the average age of directors of small firms is 54.5 with two-thirds over the age of 50 and a third over 60.
Mike Cooper, a partner at Moore Stephens, said: ‘Most important is to take advice unless you are well versed in buying or selling firms. There are various ways of selling – some good, some disastrous.’
Moore Stephens’ research showed that many company directors assume a sale will be straightforward and will take just months. But Cooper said: ‘You have to go about it in a systematic way to get information into shape, ensure records are good and systems sorted out. You must plan at least two years in advance as issues can’t be sorted fast.’
Owners also need to be aware of the tax implications of a sale and should consult advisers to ensure any deal is structured in the most taxefficient way for themselves or family members taking over the firm. Tax breaks such as Entrepreneurs’ Relief and Business Property Relief are available and setting up a trust could ensure inheritance tax is minimised.
‘You do not just wake up one morning and sell your company for top dollar. It is a stressful process,’ said Cooper. ‘You have to keep it confidential from 90 per cent of your staff and some people find that very difficult indeed.’