By Gordon Scott

Published 31st May 2023, 05:45 BST

While many Yorkshire and wider British brands have been going for well over a century, young British entrepreneurs are now more focused on successfully building their businesses with a view to exiting and realising capital earlier on.

Our recent research has shown that 57 per cent of business owners aged 18 to 34 are intent on selling their business in full, rather than keeping their wealth tied to the venture.

The number falls steadily for older age groups. This brings with it a very different set of considerations for wealth planning.

While Michael Spedding passed down the family biscuit business to his son-in-law Fred Ellis Fox almost 45 years after he started it, plans for wealth preservation will be quite different for entrepreneurs in this day and age, and for those looking to realise their gains much sooner in life.

Business founders considering exit options should take a long-term view on the options that are available to them and their wishes for preserving the legacy of the business they have created.

For example, if looking to sell, what type of sale is preferable – private equity or an external buyer, a management buyout, or passing the business on to a family member?

And what are the business owner’s personal needs in terms of capital, income and any wishes to retain control as part of their long-term planning?

Any business owner considering a sale should be clear and comfortable with the underlying rationale behind a transaction.

Selling a business is not typically an objective in its own right, but usually the means to achieving a different purpose.

Business owners must consider how a sale fits in with their personal wealth plans.

Our recent research has found that over two-thirds of wealthy Yorkshire individuals want to use their wealth for retirement income.

If this is an aim for an entrepreneur realising wealth from their business in their mid-30s then there needs to be real consideration around how this wealth is structured for the longer term.

What is the most tax efficient structure, and what are the most suitable investment assets for preserving and growing wealth depending on the time horizon?

The research shows us that one in five six-figure earners’ wealth comes from running their own business.

For high-net-worth individuals, managing large incomes and estates can be a complex issue. Capital gains tax and pension lifetime saving allowances continue to complexify a system that is opaque to start with. On top of retirement and cashflow planning for your own needs, what are your wishes for passing on your wealth? Inheritance planning is an especially challenging issue with complex heir dynamics on top of the financial considerations.

Whether building a business for a sale or to create a family legacy, there are a multitude of considerations for business founders and owners. How these ambitions play into personal financial goals should all be part of the planning process.

Gordon Scott is Head of Client Solutions at Brown Shipley, a Quintet Private B ank

Wealth planning considerations are changing for young entrepreneurs: Gordon Scott