It's a great feeling when you finally get through the sale of your business. You've got that lump sum in the bank and tax effectively out of your business and the stress of the last few months (or longer) is behind you. However, there are still questions to consider even after you complete the sale - mainly, what are you going to do now?
Selling your tourist park
While other sectors such as manufacturing and mining are shrinking, tourism in Australia is booming (the ABS values the industry at $50.6 billion), and therefore parks present an attractive prospect for corporates. This means a lot of tourist parks are being offered for sale at unprecedented rates.
Given the rates that are being achieved for the right parks in the right locations, owners often manage to sell their business for a significant amount. Also, some of the tax concessions available mean that park owners or even small groups are able to end up with the vast majority of the proceeds in their pocket, rather than with the tax office. The challenge is then what to do with that money - make some low risk investments in the current environment? Use the money to buy another tourist park? Or, move into another business altogether?
Whatever you decide, it's important to be aware that tourist park owners often experience a considerable lifestyle change when they sell their business – especially for those owner operators who have lived in their park for a number of years. You may not remember what it is like to live outside the business bubble.
Holiday park profitability is the envy of a lot of other industries. Depending on how you invest the proceeds of sale and given the current economic environment (i.e. record low interest rates), you may find you're living off less money than you're used to (sometimes significantly less).
Critical to evaluating your next step, is having an investment plan and corresponding personal budget. The Australian Securities and Investments Commission has a handy personal budget planner that may be a good start.
You also need to understand where you are accessing funds from, how much, how often and what is the most tax effective manner to do so – especially if superannuation is involved.
Deciding what to do with the proceeds of sale
Owners will use their proceeds of sale differently, depending on their individual position. Some may prefer low risk but slightly lower return investments, for example term deposits or listed securities, while others may wish to use it for retirement and others will start another business. It's essential to get the advice of a financial adviser who can recommend the best way forward for your particular situation, and take you through the advantages and disadvantages of each option.
For those that are considering buying another business, it's important to think about what skills you can bring, and how you intend to improve the business. You will hopefully find the buying of a new business easier having gone through the sale of your old one, but it’s still a good idea to seek trusted advice to help ensure your new enterprise gets off to the strongest start possible, and to put in place an exit plan prior to starting.
The best thing to do during any business process is to make sure you're asking questions so that you can gain a full understanding of what you're about to do. This is no different when it comes to investing the proceeds of sale. Contact BDO today to speak to an adviser who can help you make your decision.