By Kevin Harrington on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs
Around one third of SME owners in the UK are now over 55, with an estimated 1.3 to 1.5 million businesses owned by people approaching retirement age.
Research by Prudential found that 27 per cent of UK business owners prioritise investing money into their businesses over saving into pensions, and 19 per cent openly describe their business as their pension fund.
Many business owners don’t just lack a pension, they also overestimate what their business is worth.
Now is the time to pressure-test your business. Get a realistic valuation. Understand the gap between what your business is worth today and what you actually need to retire comfortably. Then start closing that gap, whether by building business value, topping up personal pension savings, or ideally both.
In the UK, there are three types of pensions: defined contribution, defined benefit, and the state pension. But walk into any room of SME owners and you’ll quickly discover there’s an unofficial fourth option – the belief that ‘my business is my pension’.
It’s a seductive idea. You’ve spent decades building something from nothing. The logic feels sound: when you’re ready to stop, you