Following on from Ashley’s blog last month entitled, ‘It’s never too early to start planning for retirement’, I thought I would pen a few thoughts.
Over the years I have often heard the phrase ‘Our Business is our Pension’. This is usually said with great pride, in fact, as I write this, a vision of a business owner with his thumbs in his braces (about chest height) with his chest puffed out has just entered my head, and now, no doubt yours!
I am sure this is said with great sincerity, as well as pride, as most business owners spend much of their time working ‘in’ the business. I say ‘in’, because for many, they ARE the business. A moot point is that they really should be working ‘on’ the business, actually preparing a plan to exit it, right from the start.
So, to the point. Let’s look at some role play. Steady, this is a family friendly blog!
So, you run successful, profitable business, employing a number of staff. At our initial meetings we talk about your hopes for the future and discuss when you plan to retire and enjoy life, doing the things you always wanted to do; travel, cruising, playing a round or two of golf or just simply spending quality time together, relaxing after many years of building up and running your business.
When I look at the plans you have in place, it becomes evident that there is a gap in the income your existing plans would produce, to the income you need or more importantly ‘want’. When I point this out you retort: ‘Our Business is our Pension’.
This of course means that, as far as you are concerned, you will sell it for Squillions and live off the proceeds happily ever after.
Ok, I really hope you do, BUT...
- What if you cannot sell it?
- What if one of your family suddenly decides they want to join the business? (even though they have never been bothered before)
- What if you die before you retire, your spouse is unable to manage the business and it folds?
- What if you are taken ill before you retire, profits fall, and the business loses much of it’s sale value?
- What if the business goes into bankruptcy?
- What if you are ‘ business partners’ and only one of you wants to exit the business, can he/she buy you out, can you buy him/her out?
If any of this strikes a chord, and you have perhaps used ‘that phrase’, maybe you need to think again…