Are You Getting “Next Stage Ready”? – By Ann Cooper-Smith

Business owners are usually extremely busy with day to day running of their businesses and their business planning. Many strive for revenue and profitability growth, while others are challenged just fulfilling existing demand.

But one thing they often have in common is a failure to build sufficient passive assets outside of their business to fund their next life stage. I don’t want to call it “retirement”, because with people living longer and more healthily retirement at age 65 isn’t necessarily sought after.

Rather than retirement, more people are likely to start a new hobby or career, travel, do community service, or continue to work part time in their business as a consultant while new stake holders take over daily business operations.

Funding 25 years plus of hobbies, travel, leisure and health care needs careful strategic planning.

Have two thirds of assets outside of your business
Even if you have a sellable, scalable and sustainable business Q2 still recommends that two thirds of the passive assets needed to fund the next life stage be invested outside the business.


The reality is that business is risky, and there are many factors outside the control of the business owner. Emerging technology, automation, global economic tsunamis, changing government policies, and global competition can dramatically reduce the value or profitability of a business with little warning. Planning to sell your business for millions of dollars in the medium to long term and live off the proceeds is a risky strategy that could potentially leave you in the poor house rather than living the planned life of Riley.

While KiwiSaver is a good start it is unlikely to provide sufficient income or capital to fully fund the next stage, especially for business owners already 40 or older.

Define personal goals as well as business goals
As part of Q2’s “One Page” business planning process for business owners we discuss personal goals as well as business goals. After all, the business is there to serve the owner.

Many business owners are relieved and encouraged to have the numbers around their passive asset and income goals quantified as part of the “one page” business planning process. They then have clarity about what they need to do to build income and assets for their next stage.

Cash cow or scalable and sustainable business?
Some business owners decide that their business needs to be a cash cow. Good profitability and consistently reducing debt and investing surplus cash in growth assets is their plan.

Other business owners want to grow their business into a sellable, scalable and sustainable business and set a goal for the business value they want to achieve when they are ready to exit. We then work backwards to determine what the business needs to do to be worth that amount in the desired time frame. We also set strategies to grow non-business assets and ensure they are protected from business risks.

Start planning as soon as possible
When we’re young time seems infinite, then suddenly a short time frame is staring us in the face. Planning your business strategy and personal financial goals should start now, regardless of whether you are a startup business owner with little to your name, or an established business owner looking to exit the business within the next few years.

The sooner you start business planning the better.

Q2 are chartered accountants who go beyond accounting and tax. Contact Q2 for a complimentary meeting to discuss your business strategy and personal financial goals.

Or click here to down load your One Page Business Planning Guide.

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