One of the most important decisions a business owner can make when planning for retirement is what to do with the business that has been nurtured to where it is today. However, as running a business can often take up a lot of time and energy, your plans for life after the business can often fall to the bottom of your busy to-do list.

Many business owners heavily rely on the sale of their business to support their retirement; however, there may be better options available to consider.

Taking time out of your busy schedule now can give you more time to plan and could better your chances of an enjoyable, stress-free retirement. That old financial planning saying comes to mind – “they say the best time to start saving is yesterday, but the second-best time is today”.

As financial planners, you may assume that we get engrossed in the figures of pensions, investments and markets. However, we prefer to focus on planning around our clients’ goals and what makes them tick – from pursuing passions and hobbies outside of a business environment, bucket list travel destinations, getting better at sports, learning new skills, or giving back to worthy causes.

Once we understand what your ideal retirement looks like and how much income would be required, we are then able to offer advice to get to your ideal financial position.

For business owners, retirement planning can look a little bit different, as we also need to consider the indicative value of the business and how this will support your plans.

An often overlooked point in valuing a business is whether the company itself holds value, or if the individual themselves is the most valuable aspect. If the business will no longer remain profitable in the absence of yourself, the owner, it is important to consider alternative options rather than relying on the sale of the business alone to fund your retirement. For example, utilising income from the business to save into a pension.

There are many further benefits to pension planning, even if the business is extremely valuable, including added tax efficiency for the business and yourself, as well as increased diversification.

Furthermore, pensions allow you to not rely on the business sale alone as your retirement plan. Business sales can take longer than anticipated, or perhaps the market is not doing well, meaning that you may not sell for as much as you would like. Having a healthy pension pot at the time of exiting a business adds further support to fund your retirement lifestyle.

In getting to know you and your business, we can create a tailored plan to suit your individual goals and circumstances. As part of this process, we often engage with other professionals – such as accountants and solicitors – to ensure that the right decisions are being made for the business and business owner in question, as each will have their own nuances.

To start planning for your business exit and what retirement looks like for you, please do not hesitate to get in touch with a MacDonald Partnership Independent Financial Adviser on 01463 242 242.