A GROWING number of SME company directors are now stuck running their businesses into their 70s instead of retiring, as they haven’t planned their exit early enough.
The latest research from Moore Stephens reveals that one in eight (12.3 per cent) directors of small and medium-sized businesses are aged 70 or over – some 73,430 people in 2017/18*. This is up from 72,400 SME directors over 70 the previous year.
The high number of SME directors aged 70 or over highlights the importance of having an exit strategy planned well in advance, and warns that if business owners aren’t prepared to exit when their business is at its prime, or when market conditions are favourable, they risk losing significant value.
It may take months or even years to get a business into the best possible shape to be handed over to new management or to be sold – and that’s before having to find a buyer and negotiating the right price.
Tax planning and wealth management considerations are also key, so that business owners can take full advantage of tax reliefs, while mitigating any potential impact these may have on other income and investments.
Exiting directors may also want to consider whether it is worth setting up a trust to minimise inheritance tax for relatives or whether Business Property Relief can reduce the value of businesses charged to inheritance tax.
Pete Simons, Partner at Moore Stephens said: “Our research shows that many owner managers continue working into their 70s, but most are carrying on far longer than they would probably like to due to a lack of suitable exit options.
“After spending so many years building up a business, it’s a crying shame if SME owners can’t enjoy all the fruits of their labour when they retire.
“Company directors who are still working hard through their 60s need to make time to plan for what can often be a lengthy succession process, so they can exit in an efficient way that will deliver real value.
“There’s a huge amount to think about, from making sure your business is a really strong acquisition prospect, to ensuring business affairs are wrapped up as tax-efficiently as possible. That will require joined-up advice to ensure all bases are covered and no opportunities are missed.”
For more information or to discuss the future of your business, call Pete Simons at Moore Stephens on 01536 461900.
* 2017/18 year ending 31 March