Retirement off the agenda for business owners as financial turmoil hits savings

Two out of three private business operators say they have no plans to exit their business in the next two years as turmoil on sharemarkets and falling asset values eat into their retirement savings.

Two out of three private business operators say they have no plans to exit their business in the next two years as turmoil on sharemarkets and falling asset values eat into their retirement savings.

PricewaterhouseCoopers’ private business barometer survey reveals close to half of those business operators surveyed have established self-managed superannuation funds, with the majority claiming they had done so in order to gain more control over their investments.

But sharp falls in share prices around the world caused by the credit crisis and the economic slowdown have smashed the value of superannuation funds, causing retirement plans to be postponed.

PricewaterhouseCoopers partner Gregory Will says: “This trend has been especially pronounced in the last six months with the value of businesses and retirement savings less than they were 12 months ago.”

The survey revealed the number of companies that had missed their revenue targets had doubled since February, with the largest percentage of businesses failing to meet revenue targets in NSW (40%) and Victoria (35%). But conditions remain strong in the resources-led states of Western Australia and Queensland, where 98.4% and 86.8% of businesses reported they had exceeded their revenue targets.

Not surprisingly, funding remains the biggest concerns for business owners and the lack of money available is hurting their ability to grow – a massive 56.9% of businesses are not planning to invest in their business in the next 12 months, up from 45% in February.

There is a now a stronger focus on medium-term organic growth, up from 44% to 52% in the last six months.

Despite all this gloom, it appears private businesses are still optimistic they can produce reasonable growth – one year sales and profits targets in August 2008 were 11.1% and 0.4% respectively.

Related stories:

• Investing in a bear market
• Strategy in a downturn – 10 lessons from the last recession
• 10 tips for marketing in a downturn