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Life After Business

By June 29, 2018June 19th, 2020Business, Retirement, Uncategorized

I was talking to my mate Derek the other day (if you haven’t met Derek, I first introduced him here)

Like me, Derek has been in business for himself for most of his working life.

We were discussing what we might do once we retired, and to be honest, both of us were struggling to come up with anything meaningful. There are a couple of issues at play here, which affect most of the business owners I have come across in my more than 30 years working in and around business.

The first is that for most business owners, a large part of their sense of self, of their self-worth, is bound up in their business. Many small business owners are indistinguishable from their business, most of the businesses concerned would not survive without the principal’s active involvement.

The second is that most small business owners have been so involved in their business, for so long, that the thought of not being involved in business is almost alien to them. Not only have they been so busy as to not have time to think about life after business, but they have also have not had the opportunity to develop interests outside of their business which might occupy them once they no longer have a business. This is really scary!

Research has shown that a lack of exit planning by Australia’s growing and ageing population of private business owners could have serious consequences on the owner’s wealth. Analysis by PwC estimates that at June 2024, a third of the 1.54 million private business owners in Australia will be over the age of 55. During the next 10 years, more than 1.4 million are expected to retire.

There are three main reasons why I have observed small business owners find themselves unprepared for life after business.

  1. They have treated the business as a job rather than as an investment which at some time in the future ought to be able to realise some value for the time effort and money they invested in it. Many business owners do not invest sufficiently in the growth of the business to ensure that it maintains its value, instead preferring to withdraw all of the funds generated to fund their personal lifestyle. Whilst this might be beneficial in the short term, over time, any business needs to have investment in it to ensure it maintains its value.
  2. The business is entirely dependant on the owner or principal. All business owners have faced the dilemma of not being able to do everything in the business or having conflicting priorities which necessitate the delegation of some duties to others. Really successful businesses and those which will maximise the return on investment to the owner on sale are not just viable whilst the current owner is involved. The business owner who has the foresight to structure his business in such a way that it can survive without him or her will reap the benefits when it comes time to leave.
  3. The perpetual business dilemma, time and money. When business is going well, there is often little time available to focus on maximising the business’s value, and why would you need to, after all, business is going well. When business is going not so well, there is time to focus on the business, but no budget to spend on doing so, as well as pressure on the owner to focus on returning the business to wellness in the short term. With these two pressures, there will never be a time when the business owner can take stock of where he or she is at in terms of leaving the business, or at the least having the choice to do so.

In the end, there will be life after business, or there should be, and a business owner is entitled to enjoy the fruits of his labour in retirement, as much as the next person if not more so. The biggest single asset most business owners have is their business, and its value needs to be maximised. Emotion can cloud the issue though, as all of those self-worth, self-esteem issues can affect your judgement. Having an independent set of eyes look at your business, and provide advice on what you can do can help to provide clarity, even if you’re not looking to retire next week.

Derek and I ended our conversation with an agreement that we needed to get back to work. We’ll get back to the retirement thing sometime I’m sure. In the meantime, there is always lots to do.

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