After the second world war, there was a surge in the population which is now more commonly known as the baby boomer generation. Sixty or so years on these baby boomers have started to retire. In fact in the UK in 2006 there were more pensioners than children and by 2029 there will be some 5M more baby boomer pensioners.
There are about 4M businesses in the UK and of these about 3.2 million are one person businesses with a further one million having up to 249 employees. It is estimated that, as the baby boomer owners start to retire, 30% of these businesses will transfer ownership during the next 10 years. That is 1.5 million businesses! And with fewer younger entrepreneurs coming through many of these businesses will not be sold but simply shut down.
According to the Office of National Statistics 67% of us either have no idea or only know vaguely how much our pensions will be. And many of us do not think we can live on whatever pension provision we have made. The sad fact is that many business owners will rely on the sale or transfer of their business to fund their retirement. But as we have seen many businesses will simply close down. A government report shows that 80% of all one person business transfers fail and 20% of all transfers of business with more than one employee also fail. Will yours be one of the staggering 1M businesses that fail to transfer during the next 10 years?
One of the main reasons for failure is lack of adequate planning sufficiently in advance of the proposed retirement date. This is often due to lack of time as the owners are busy running the business from day to day and lack of adequate skills in areas such as tax planning and business development.
If you want to know more about how you can plan for you own retirement call me on 01903 784651 or email bob.francis@sgba.co.uk