How to retire from your own business

Whilst a global pandemic might not seem the right time to exit your business, it could be the right time to start planning for when you will, especially if 2020 has sent your business into a bit of a tailspin.

As much as you’re focused on what it will take to recover, remember that what ultimately matters is that you get what you want out of your business when you finally want to retire. Financial success is all well and good but if you’ve got your sights set on spending your later years lying on a beach somewhere glorious or caravanning (or taking the train) across the country, that takes more than a solid business, that takes planning for you. Luckily, we know just the people who can to help with that (hint, it’s us!) and we’d be delighted to share with you a couple of tips to get you started planning your business exit!

Keep an eye on your super

This one might seem a little obvious, but make sure you’re contributing to your own super. Any small business owners (sole traders, trust owners) aren’t required to pay into their own super funds on a regular basis like ‘PAYG employees in companies’, but we can’t recommend enough that you do. It’s important to have an account that is independent of your main source of income as back up if things go awry. With no one to remind you to do it, it can be easy to let things lapse and forget the cardinal rule of saving (and running your own business) – pay yourself first.

It’s not just about remembering your obligations either. When setting up super, it’s easy to get comfortable and just assume all super is equal and your money is in the right place – unfortunately, that’s not always the case. There can be a bewildering array of options available when it comes to super (SMSFs, retail funds, ethical funds, green funds, different investment strategies) so make sure you’re talking to your financial advisor about what you can (and should) expect from your current fund.

Additionally, be sure you only have the one fund! If you have been working for a while you might’ve bounced between a few and different times in your life. If you’ve got money sitting in an unused account, chances are it’s getting eaten up by fees, so make sure you’re keeping things streamlined and your accounts in check.

Succession Planning

We’ve talked before about passing the reigns and with good reason. Planning who takes over your business when you decide to hang it up isn’t just a matter of ensuring your legacy, it’s also about ensuring your income post-working life. By leaving things in good hands and keeping some share of the business, you maintain a source of income – minus all the hassle of actually running the place. Just make sure your 2IC is up to the task and that your you keep other options open – if 2020 has taught us anything its that no business is disaster-proof, so best not to leave all your eggs in a basket that might get blown out of the water through no fault of your own.

Play the Long Game

As a business owner, retirement probably sounds like a scary thought after spending so long in the driver’s seat, but it might also get you a little bit excited. Whilst you should certainly start thinking about how you’ll spend your twilight years, don’t get too eager and jump the gun. Like many major life changes, retirement takes time to do right. Depending on your current situation, you could need up to five years to go out on your terms – especially if you have to also factor a ‘Covid recovery’ in as well. People are living longer and longer which means your money has to stretch further and further – probably much further than your parents savings had to. Have a chat to your financial advisor about what you’d like your retirement to look like – and what it might take to make that vision a reality.

If you’d like help planning a better exit strategy, we’d be delighted to help. You can call us on 02 6023 1700 or drop us a note via the form below