When it comes to selling your business, you need to put in as much time and effort into making your sale work for you and your family as you have in building your business up from the ground.

In fact, you may have even read our previous blog with five useful tips for business owners to consider when selling up.

But one crucial part of this that can often go missing is the importance of thinking about life after exiting your business within these plans – after all, that’s almost entirely the point in running your business in the first place.

So, here’s how to make sure you’re ready for life after exiting your business.

Knowing what you want in the future

The first step in preparing for life after your business is to work out what you want to achieve in the future.

You might be selling your business for one of many different reasons. This could include:

– Divesting yourself of ownership responsibility, while staying involved in the business in some way

– Selling to take a different paid position in another company

– Selling with the intention of using the proceeds to start a new business

– Selling to retire.

No matter what it is that you want to achieve with your sale, you need to be clear on why you’re selling. Having goals makes it much easier to make informed, incisive decisions.

You also need to prepare yourself for the emotional side of your sale. For many business owners, their identity becomes tied up in their business as they pour in so much hard work.

There’s nothing wrong with this; putting in the effort is what makes businesses successful, and so there’s no shame in it having become central to your character.

What this does mean, of course, is that you need to take the time to figure out who you are and what you want to do away from the business.

It can be particularly useful to speak to someone who has been through it before you or even work with a professional who can support you, as this can be quite a transformative life transition.

Making your sale fit your goals

Once you know what you want to achieve, it’s far easier to create a plan for the sale of your business that can help you to achieve your goals.

For example, when selling a business, it can be easy to get caught up in finding the biggest possible offer. But actually, the most sensible course of action might be to target enough to reach your goals, rather than what you think the business is worth.

So, if you had valued the business at £1 million but you think you’d only need £750,000 to start your new venture or live your ideal retirement, you could lower your price as an incentive to potential buyers without having to compromise on your lifestyle.

Exiting a business and tax

You should also give some thought to the tax-efficiency of your business. Tax reliefs such as Business Asset Disposal Relief (BADR) could help to ensure that more of the proceeds from your sale go into your pocket, rather than in tax payments.

You could consider investing in the Enterprise Investment Scheme (EIS) or a Venture Capital Trust (VCT), too. These investments confer certain tax benefits if you’re willing to take on the additional risk that comes with them.

However, bear in mind that these are high-risk investments and are not suitable for everyone.

Similarly, you might want to reconsider other parts of the business, such as commercial property contained within a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS).

Now that you’re exiting your business, the tax benefits of holding property like this may no longer be as attractive. You may also need to sell your commercial property so you can access that value to fund your lifestyle after you’ve sold the business.

All these considerations can have a tangible effect on your future, so make sure you factor them into your decision making.

How we can help at Cordiner Wealth

If you’re thinking about your future after exiting your business but you’re unsure where to start, you should consider working with us at Cordiner Wealth.

As financial planners, we can help you to work out how much you need from your sale. We use Voyant cashflow modelling software to create a visual image of your business and personal finances.

This information can be invaluable in helping you to make decisions over how much you need to live the lifestyle you want.

We can also help you consider your tax liabilities, finding the most effective strategies to make sure that you’re the biggest beneficiary of the sale.

Perhaps the best way we can help you is in designing a plan for your future to help you figure out who you are and what you want to do in this new stage of life.

Most importantly, we can act as a sounding board for your ideas and provide support and guidance throughout this process.

No matter who you are or what you want to do, we can help you with a personalised plan that allows you and your family to live the life you want.

Get in touch

To find out more about how we could help you when selling your business and preparing for life afterwards, please get in touch with us at Cordiner Wealth.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 for more information.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

These higher-risk investments are typically suitable for UK-resident taxpayers who are able to tolerate increased levels of risk and are looking to invest for five years or more. Historical or current yields should not be considered a reliable indicator of future returns as they cannot be guaranteed.

Share values and income generated by the investments could go down as well as up, and you may get back less than you originally invested. These investments are highly illiquid, which means investors could find it difficult to, or be unable to, realise their shares at a value that’s close to the value of the underlying assets.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Tax levels and reliefs could change, and the availability of tax reliefs will depend on individual circumstances.