When the boxer Mike Tyson was asked before he fought Evander Holyfield if he was worried about Holyfield and his fight plan, he replied: “Everyone has a plan until they get punched in the mouth.”
And that is how many family business owners must be feeling after COVID-19 pandemic – no one could have foreseen a global pandemic around the corner. So now with supply chain problems, rising material costs and inflation putting pressure on wage costs, it all seems as though they are teaming up to wreck carefully-crafted retirement plans.
But was your plan a bad plan? No, it just took a bit of a battering. But let’s focus on the good bits and see how we fix the not so-good parts.
Nick Latimer, Tax Partner in the Cheltenham office of national audit, tax, advisory and risk firm Crowe, advises business owners, entrepreneurs and families on appropriate ways to structure their affairs to make the most of tax allowances and reliefs.
Nick gives an insight into the challenges being faced by family business owners…
One of the issues that is throwing many retirement plans out of shape is uncertainty over valuations.
But there are two sides to this coin.
If you have to accept a lower valuation of your business, could this be the time to begin the process of passing the business on to the next generation?
A lower valuation could mean lower tax implications. Chancellor Rishi Sunak has stated that he plans no changes to Inheritance Tax or Capital Gains Tax in the remaining lifetime of this Parliament.
Perhaps you should act now before the next Parliament, or before the cost of living crisis forces his hand?
Anyone who has piloted a business through the past two years can be forgiven for perhaps feeling a little punch drunk, and with the majority of businesses relying more and more on technology, the coming of 5G, Artificial Intelligence spreading throughout business processes and the need to think and act nimbly, could now be the right time to pass your business on to the younger, more tech-savvy members of the family?
While innovation has been key to survival throughout the pandemic, some of the biggest changes have been to mindset and priorities for the future. A pandemic-inspired heightened sense of mortality may have encouraged senior members of the family to consider their position.
COVID-19 made everyone pause and reassess what’s important and family businesses are no exception. Whereas, in the past, family members have grown into roles, as much out of a sense of duty as expertise, post-pandemic there will be many family businesses who reflect on the purpose of the business.
Are there the skill sets within the businesses needed to make it a success, and do they exist within the immediate family? Or should you be considering a sale and if so, how do you go about it?
What about a potential halfway house?
New business structures such as Employee Ownership Trusts have helped a number of business owners ease their way into retirement and this is a highly tax-efficient exit for the owner.
Many long-standing business owners who have been reluctant to think about or discuss retirement plans or inheritance tax are now seeking to take advice on family wealth and succession planning to protect themselves and their family for the future.
Often the support we at Crowe give can be more in the way of a family counsellor role to start with, but the tax planning advice we provide is a foundation to build on to support your goals.
It is clear that we are on the cusp of further major technological or societal disruption, and this brings fresh business challenges. The pace of change only seems to be increasing. For those who acknowledge they are ‘digital dinosaurs’, these challenges are perhaps best tackled by the younger generation.
We can help our family clients achieve their transition from one generation to the other and focus on retirement goals.
Strategic thinking is now more important than ever. Let’s start the conversation.
To start the conversation on how we can help your business, call Nick Latimer on 01242 234421, or email Nick.Latimer@crowe.co.uk