The majority of small-to-medium-sized business owners don’t have an accurate understanding of how much their business is worth or how much profit was achieved in the past year.
RSM Bird Cameron’s eighth annual thinkBIG 2014 study revealed only 35 per cent of small- and medium-sized enterprise (SME) operators had completed a formal financial valuation of their business, despite 67 per cent suggesting their business’ value had increased in the past 12-months.
The study by the accounting firm comprised 502 business owners and considered business growth and profitability, business planning, exit planning and superannuation, according to Hospitality Magazine.
National head of business solutions for RM Bird Cameron Andrew Graham said it’s important for SME operators to know how much their business is worth, especially if the sale of the business is the primary source of retirement funds.
The study revealed 61 per cent of SME operators were not aware of the tax concessions available upon sale, up from 54 per cent in 2011. It also found 42 per cent of participants have a plan to exit the business, with 52 per cent of those anticipating they will exit within the next four years.
When looking at retirement, the study found 36 per cent expect the proceeds from the sale of the business to be their primary source of funds.