• Nearly half of small and medium business owners expect their retirement will trigger the closure and liquidation of their business or force them to sell to someone outside the family
• 46% of small and medium business owners expect to be working in some capacity after they turn 67, most for financial reasons
• Two thirds of SME owners do not have a documented wealth transfer strategy in place

Small and medium business owners nearing retirement face succession planning challenges as their children pursue their own careers instead of taking over the family business.

New research from NAB Private Wealth shows that many small and medium business owners are working beyond the traditional retirement age due to significant retirement roadblocks.

Nearly half of these business owners are over 50 and 22% are within five years of retirement age but 46% expect to work after turning 67.

NAB Private Wealth executive Michael Saadie said business transition was changing, sparking new succession planning challenges for small business owners.

“For generations, small business owners expected family members to take over, but that reality is shifting, leaving many unprepared for retirement,” Mr Saadie said.

“Most business owners no longer anticipate a family successor because fewer next-generation family members are seeking to step into small business ownership roles.

“Next-generation family members may have career aspirations in new and evolving industries or face growing complexities of managing a business in an increasingly competitive landscape.

“At such a pivotal time, this shift makes it critical for business owners to have a well-structured succession plan, so they have certainty over what happens to their business when they retire,” Mr Saadie said.

Over half of small business owners want to retire by 67, but 46% expect that will trigger the closure, liquidation or sale of their business to someone outside the family. Less than 4 in 10 expect their family to take over.

Most small business owners who expect to be working after 67 cite financial reasons, highlighting the need for early financial planning to unlock value and untangle their personal and business finances.

“Despite their success in building and sustaining successful small businesses, for many the concept of retirement looks vastly different from traditional expectations,” Mr Saadie said.

“As Australia’s biggest business bank, we know the immediate big challenges small businesses face like hiring and retaining talent and navigating red tape, but also the longer-term thinking around succession and wealth planning, which is crucial.

“Too often the focus on wealth planning is overlooked, addressed too late or put in the ‘too hard’ basket but failure to plan can put both their business and personal wealth at risk.

“This research highlights the urgent need to better support the vital contribution small business owners make to our economy and our way of life,” Mr Saadie said.

Small business owners fall into three wealth transfer planning categories. One third have a documented plan, one third have discussed general plans but haven’t written a firm plan down, while the rest have no plan at all.

Joe Rinaldi owned and managed a Mazda dealership in Sydney’s northern beaches which was a personal passion and the culmination of decades of dedication. By 2021, he was ready to step back, prioritise his family responsibilities and enjoy a well-earned retirement.

“The loss of my father and caring for my elderly mother made me rethink the long hours involved in my business. The pandemic was another huge test of resilience for many small business owners so, after that, I decided it was time to exit the dealership,” Mr Rinaldi said.

“I loved the motor trade business, but when I turned my mind to succession planning, I realised the challenges involved. These included significant investment that would be required from my family or business partners who might want to take over, as well as rising regulatory complexity and my own changing personal priorities.

“Ultimately, I decided a clean sale, rather than finding a next-generation dealer principal, would offer me and my family the simplest path forward and allow me to manage my finances more effectively.

“My advice to small business owners is to start planning early. Even if you foresee a sale or retirement years from now, discussing potential scenarios with a trusted accountant, lawyer, or private banker can help you map out possibilities early and avoid last-minute surprises,” Mr Rinaldi said.

Less than a third of small business owners state they have an ongoing relationship with a financial adviser and many either turn to their accountant or remain unsure where to access reliable information, support and guidance and express a desire to build relationships with trusted partners such as private bankers.

“By building out comprehensive wealth transfer strategies, business owners can achieve financial security and leave a lasting legacy for future generations,” Mr Saadie said.

Additional information:

• Data and insights on succession and wealth planning from NAB Private Wealth “Beyond the Business” report on navigating retirement and succession for small business owners. The full report and insights are available to download at: https://business.nab.com.au/life-beyond-your-small-business
• NAB is Australia’s largest business bank and has more than 750,000 SME customers and NAB Private Wealth has been awarded best private bank in Australia for the 4th Consecutive year (2022-2025) by Global Finance.
• In November 2024, NAB released a major report “Backing our Businesses” which highlighted the biggest challenges for SMEs including hiring and retaining staff, too much red tape, cyber-attacks, digitalisation and artificial intelligence, access to capital and resilience of supply chains.