You’ll have sunk countless hours and no doubt had plenty of stressful, sleepless nights getting your business to where it is today.
So, once you’re ready to reap the rewards of all that hard work, you’ll want to make sure that the next stage is just as successful.
You may have read our previous blog where we discussed some useful tips for getting your business ready to sell, from preparing fully to finding ways to reduce a tax bill.
But have you given any thought to the fact that you need to be ready to sell your business, too?
You’ve likely been integral to your business’s success, and as a result it holds a special place in your heart.
That’s why preparing to sell a business is just as much about you, your feelings, and your retirement goals, as it about selling the company itself.
How much do you really need?
When you start looking for buyers for your business, you may set yourself a figure for how much you’re looking for.
You may have meticulously calculated this figure based on the value of business assets and potential profitability. Or it may be a valuation from a business expert who knows how much small or medium-sized enterprises (SMEs) tend to go for.
Both these methods ignore a simple and really important question: how much do you actually need?
Rather than trying to calculate the figure, you could use your retirement goals to determine the amount you’d want to receive.
For example, you might have come up with a sale price of £1.5 million. But realistically, if you only need to sell your business for £1 million to live your dream retirement, why wait for more?
A higher price can seem attractive, but there’s no point holding out for a figure that you don’t need if a smaller one could pay for the retirement you’ve always wanted.
Creating a “business plan” for your retirement
As a business owner, you’ll have years of experience in creating business plans. No matter what you wanted to achieve with your company, planning will have been a central element to it.
The trouble is business owners often spend too much time planning for their business, and end up neglecting planning their personal finances.
Your post-work life could last for upwards of 20 years. This is a significant stretch of time, and one that you need to be financially ready for.
Your business will play a vital role in that, and there’s no shame in making it the best you possibly can. But that also means that you need to take the time and create a “business plan” for your retirement that makes sure you have enough to live on.
Your goals should define your plan
More than anything else, it’s your goals that should sit at the basis of this retirement business plan. After all, the effort you’ve put into your business will have been for a specific purpose.
Take a moment to consider what your goals are for your life. Do you want to travel the world, or visit somewhere far away that you’ve never had a chance to see?
Perhaps you even want to live in another country, and you always intended to use your business to finance the move?
Or are you more content with simply spending as much time as possible with your family, watching your grandchildren grow up?
Obviously, these examples will each require a different amount of money. That’s why they should form the basis of your plan.
Having a target figure in mind makes it far easier to make decisions about how much you need from your business.
Working with an expert
This is where working with an expert can add true value to you.
It can be hard to work out your personal goals. Sometimes you’re just too close to see what really matters to you.
By working with a financial adviser or planner, you have an expert to help you answer those tricky questions. They can guide you through the process of working out exactly what it is that you want to achieve in your retirement.
More importantly, they can use these goals to design a bespoke, personalised financial plan that helps you get there, using your business to help you do it.
This is invaluable for anyone, but particularly when you’re selling a business and you’re not sure how much to look for.
A financial planner is an indispensable resource that can help you make the right decisions for you.
Work with us
At Cordiner Wealth, we have years of experience in helping business owners like you to achieve their financial goals.
By working with us, you’ll have a professional in your corner who can help you work out what you want to achieve, what you’ll need to do it, and how to get there.
If you’d like to find out more, email firstname.lastname@example.org or call 0113 262 1242 to speak to us.
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.