RSM Bird Cameron has released its annual thinkBIG study which surveyed 308 small business owners.
“It is not surprising that more than half of businesses reported a flat or reduced turnover,” said Andrew Graham, national head of business solutions at RSM Bird Cameron. “Many industries are still experiencing difficult times.
“The retail sector faces challenges such as the battle for online sales, decreased consumer confidence and unemployment,” he added. “Resources, mining and manufacturing encountered challenges caused by exchange rates and the high cost of doing business in Australia.”
The study found that 44% of respondents have a plan in place to exist the business, which is a significant rise on the 24% result from the previous year.
When those business owners eventually sell up, 34% expect the proceeds to be the primary source of retirement funds. This was up from just 15% the year before. In addition, 66% of those surveyed believe the value of their business has increased over the past 12 months.
“This is a huge increase,” added Graham. “Reliance on the sale of the business to fund retirement reflects the generally poor investment returns SME owners have received over the past few years.
“It may also be due to the need to sell external assets to help fund the business while things have been tough. This means SME owners are left only with the sale of the main business to fund retirement.”
The research also found that 51.5% of respondents work between 40 and 59 hours per week on their business.
RSM Bird Cameron also probed attitudes to tax concessions as part of the study. The team found that 54% of respondents were not aware of tax concessions that were available on the sale of the business. This was a very similar result to the 54% posted in 2012.
“This illustrates the importance of consulting an advisor and building the tax strategy into the five-year business plan,” continued Graham. “Some concessions are very generous and will support funding the owners’ retirement. They ultimately reduce the overall taxation liability that arises as a result of the sale of the business.
“Not only is it important to consider these concessions, but also the structuring of the sale transaction, which can have a fundamental impact on both the price a potential acquirer is willing to pay and the ability to extract the maximum after tax sale consideration for the owner.”