The owners of small and medium enterprises that are faced the challenges of planning of succession of retirement as their children pursue their own careers instead of taking care of the family business.
A new research of NAB’s private wealth shows that many owners of small and medium -sized companies are working beyond the traditional retirement age due to significant retirement obstacles.
Almost half of these business owners have more than 50 and 22% within five years after retirement age, but 46% expect to work after 67 years.
The NAB private wealth executive, Michael Saadie, said the commercial transition was changing, which caused new succession planning challenges for small businesses.
NAB Private Wealth Executive Michael Saadie
“During generations, small businesses expected family members to take over, but that reality is changing, leaving many without preparation for retirement,” Saadie said.
“The majority of business owners no longer anticipate a family successor because less members of the next -generation family are trying to assume the roles owned by small businesses.
“Next generation family members can have professional aspirations in new and evolving industries or face increasing complexities to administer a business in an increasingly competitive panorama.
“At such a crucial moment, this change makes it essential for business owners to have a well structured succession plan, so they are certain about what happens with their businesses when they retire,” Saadie said.
More than half of small businesses want to retire in 67, but 46% expect the closure, liquidation or sale of their business to someone out of the family. Less than 4 out of 10 expect their family to take over.
The majority of the owners of small businesses who expect to work after 67 citing financial reasons, highlighting the need for early financial planning to unlock value and unravel their personal and commercial finances.
“Despite its success in the construction and maintenance of small successful companies, for many, the concept of retirement looks very different from traditional expectations,” Saadie said.
“As the largest commercial bank in Australia, we know the great immediate challenges faced by small businesses, such as hiring and retaining talent and navigating the bureaucracy, but also long -term thought around the succession and planning of wealth, which is crucial.
“Too often, the focus on wealth planning is overlooked, addresses too late or puts on the ‘too hard’ basket, but lack of planning can put both your business and personal risk at risk.
“This research highlights the urgent need to better support the vital contribution that small businesses do to our economy and our way of life,” Saadie said.
Small businesses are divided into three categories of heritage transfer planning. A third has a documented plan, one third has discussed the general plans but has not written a firm plan, while the rest has no plan.
Joe Rinaldi possessed and administered a Mazda dealership on the beaches of northern Sydney, which was a personal passion and the culmination of decades of dedication. By 2021, he was ready to step back, prioritize his family’s responsibilities and enjoy well -gained retirement.
“The loss of my father and the care of my old mother made me rethink the long hours involved in my business. The pandemic was another great resistance test for many small business owners, so, after that, I decided that it was time to leave the concessionaire,” Rinaldi said.
“I loved the motor trade business, but when I realized the planning of the succession, I realized the challenges involved. These included a significant investment that would be required of my family or commercial partners that could take charge, as well as the increase in regulatory complexity and my own changing personal priorities.
“Ultimately, I decided that a clean sale, instead of finding a next -generation dealer director, I would offer my family the simplest way and allow me to administer my finances more effectively.
“My advice for small business owners is to start planning early. Even if it foresees a sale or in years of retirement from now on, discussing potential scenarios with a trusted accountant, a private lawyer or banker can help him map the possibilities early and avoid last minute surprises,” said Mr. Rinaldi.
Less than a third of small businesses declare that they have a continuous relationship with a financial advisor and many resort to their accountant or remain insecure from where to access reliable information, support and guidance and express the desire to build relationships with trusted partners such as private bankers.
“When developing comprehensive wealth transfer strategies, business owners can achieve financial security and leave a lasting legacy for future generations,” Saadie said.
Additional information:
The data and ideas about the succession and planning of the richness of NAB’s private wealth “beyond the business” report on the navigation of retirement and succession for small businesses. The full report and ideas are available to download at: https://business.nab.com.au/life-beyond-your-small-business
NAB is the largest business bank in Australia and has more than 750,000 Pyme and Nab Realth private clients has received the best private bank in Australia for the fourth consecutive year (2022-2025) for global finances.
In November 2024, NAB published an important report “Going back to our businesses” What highlighted the greatest challenges for SMEs, including hiring and retention personnel, too bureaucracy, cyber attacks, digitalization and artificial intelligence, access to capital and resistance to supply chains.
