“My business is my pension”. We hear this a lot. There is no doubt that building a successful business can fund a great retirement, but it is not often a simple transition. The lump sum that arises when selling a business only provides the raw materials. A savvy business owner should also have a roadmap to guide them through the sale and into the next phase of life. The journey from owning and running a business to financial freedom* requires a financial plan as well as having enough money.

The following questions should help broaden the thought process one goes through when planning an exit from an established business.

How does the lump sum become something that can provide a reliable and regular income in the same way?

The mechanics of a diverse portfolio are something that can be explained quite easily. What is more difficult to determine is how you will feel when you are relying on an income that is not directly linked to you own efforts. You may have never had to rely on an income that didn’t require direct effort on your part.

How much risk should you take when selling a business?

Anyone that leaves the security of a regular salary to start a business with a blank sheet of paper, knows a great deal about risk. After time, the risks become less noticeable due to knowledge and experience. How will it feel as a new retiree to risk all you have accumulated by investing in assets over which there is limited influence or control.

What happens if markets wobble?

Most plans will have a portfolio of complimentary assets at their core. If markets fall, it is quite common for people to tighten their belts and put things off until markets recover. A typical active retirement lasts about 10 – 15 years. Putting things off for a couple of years removes approx. 15% of your active retirement. This is akin to losing one day per week (one of the good days!). A good financial plan will help you avoid putting things off if markets start to fall.

What else goes once I’ve sold my business?

The most common things we hear after a successful career are that people miss the challenges they have become used to. The camaraderie of having a great team around you to help navigate obstacles and challenges is almost impossible to replace. No longer being the rainmaker can create a huge void for people who tend to be the most dynamic individuals.

A financial plan, as compared to a suite of investment recommendations, will help you answer these questions and in turn help our planners design a solution to help you use your money well.

Working closely with our business advisers ensures you get the full value of your business. Continuing the relationship by consulting with one of our financial planners ensures you and your family get the most value from your business.

What next?

As always, the Financial Planning Team are on hand to discuss any thoughts or concerns that you may have about selling a business, so please do not hesitate to contact us. In the first instance, please contact Ian Wells.

* Living an ideal lifestyle without the need to work