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Some business owners focus a lot of time and energy making plans for the future of their companies. When it comes to their personal financial futures though, many are ill-prepared, a new RBC Wealth Management survey shows. Of the business owners surveyed, 49 percent indicated they don't have a will, and 22 percent have not started any formal wealth transfer planning.

"Business owners, in general, have a very difficult time separating their professional lives from their personal lives," says John Younger, managing director of the business owners and entrepreneurs segment at RBC Wealth Management International in London. "They do tend to pride themselves on being in control and aware of business trends, but tend to overlook things on the personal front."

Without a proper personal wealth plan, business owners could find themselves working longer or living more frugally in retirement than they had hoped. "Some business owners want to keep working until they die, but the prudent advice is that you need to prepare for possible retirement," Younger says.

Business owners are better prepared and educated than most

While they may need to map out the future of their personal wealth, the RBC survey shows business owners are better prepared than other types of professionals: 39 percent of business owners have a wealth transfer plan in place, compared to 26 percent of all employed professionals measured. The survey also shows business owners with more than US$10 million (£ 7.76 million) in assets are three times more likely to have a full wealth transfer plan compared to those with less than $1 million.

The survey, which included 384 business owners in Canada, the United States and the United Kingdom shows the British are the most proactive when it comes to educating themselves on finances. About two-thirds (64 percent) of respondents do their own research to improve their financial literacy, compared to 55 percent in the U.S. and 52 percent in Canada.

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"This independent approach to learning reflects respondents' deep sense of responsibility over wealth," the report states, adding that nearly three-quarters of British respondents felt personal accountability for understanding their financial affairs. A quarter also cite family governance and wealth transfer as important, compared to just one-in-five respondents in North America.

The importance of having a business succession plan

Younger and his team help business owners in Britain use their knowledge and sense of financial responsibility to plan for the succession of the business and, eventually, their own retirement.

Younger describes them as "wealth challengers," prompting clients to think about what retirement means and looks like to them. That includes whether to sell or transfer the business, and when. Owners will also need to set aside money for themselves, their children and possibly charities.

With a sale, owners are most likely to sell to a partner or a third-party, seeking full value for the company. Some owners may choose to transfer or gift the business to a child, with an option to retain shares or draw income as an employee or consultant to help fund their retirement.

Owners considering a transfer of the business to one or more children need to determine if they actually want to carry on with the company. "Many don't," says Dion Lindskog, head of wealth structuring at RBC Wealth Management International. "Often, the kids are more interested in pursuing their own careers."

It can be a tough conversation, on both sides. In some cases, one child may want to be in the business, while others don't, even if they have been in the past. That's where many owners struggle to find the best way to divide their assets among children in a fair and equitable way.

"The biggest challenge for business owners when it comes to wealth transfer is that they desperately want to treat the next generation in a very fair manner. Striking the balance can be difficult," Younger says.

Owners may also want to donate to charitable causes as they exit the business. "Many business owners take great pride in being generous through their retirement by giving back to the society that was the framework that allows them to be successful," Younger says.

Plan for a future beyond the business

Owners should also consider setting aside funds for retirement long before they even consider selling or transferring the business, Lindskog says. He often recommends owners set up their own personal pension plan, as they would for their employees.

Owners sometimes shun the idea. "The common phrase is that, 'My business is my pension,'" Lindskog says. While that may be true, he still suggests a pension as a safety net, just in case the business doesn't succeed as they had hoped.

"Why put all of your eggs in one basket? Have at least two options: your business and a pension on the side," Lindskog says.

"Sometimes the business isn't going to provide the level of income you need, so you can end up with people having to work far later than they'd ideally like to. You end up with a very disappointing retirement."