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Live Cheap or Die Young

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Live Cheap or Die Young

By , February 26, 2015

Live Cheap or Die Young

 

We have all heard and read about the wave of baby boomers heading towards retirement and old age, and the corresponding looming impact on our health and age care resources. But, have we really stopped to think about what these numbers look like and the impact on our society? Let’s stop to think for a minute about the sheer weight of numbers?

At the start of this century, in the year 2000, there was just under 2400 people in this country turning 65 each and every week. That is, in 2000 just under 2400 people each week were hitting the official retirement age. By 2011 this number had risen to just over 4000. This year just over 4800 people are turning 65 every week. By 2025 this number will have risen to around 5800. In the last 15 years the number of people hitting 65 years of age every week has doubled and over the next 10 years this number will continue to rise by a further 21%.

It’s therefore easy to understand why politicians and others are concerned about the shrinking tax base and the flow-on impact on our health and aged care resources. But, what about the impact on business ownership and management? Not all of these people own businesses or hold senior management positions, but a significant percentage do! Along with the wave of demand on the health care system and our aged care facilities, will also come a wave of businesses hitting the market and a wave of exits from senior management positions.

Without proper planning the laws of supply and demand will simply dictate value and price. Without proper planning as more and more businesses hit the market, unless there is a corresponding uplift in demand, prices for those businesses will simply fall. Generation Y will be the beneficiaries and baby boomers will not realise what they could from the businesses that they have worked so hard to build. The average sale price of small to medium enterprises has already declined since the start of the global financial crisis (GFC). Baby boomer retirements will often therefore be under-funded as much of their wealth is tied up in those businesses. The flow on from that is retirement life styles won’t be what people had hoped for, or they will be forced to keep working. When faced with an under-funded retirement, one such person turned to me and said “I have two choices, live cheap or die young”.

The good news from all of this is that it is not too late. Business value can certainly be improved and coupled with a solid succession and transition plan your business exit can be lucrative and enjoyable. Especially if these plans and strategies are coupled with a strategic sale verses simply listing it for sale and taking what you get.

scottpatterson

Scott Patterson

Director | Succession Plus

Scott Patterson has extensive business and professional experience, including over 20 years as a principal of a highly successful public accounting and financial planning firm. His passion is working with clients to improve the value of their businesses, and create a more certain future for them, their stakeholders and their families.

Scott's aim is to deliver strategic thinking, tailored advice and integrated solutions for family businesses, SME's and agricultural enterprises.