SME owners global survey on Business Succession and Exit Planning
A new global survey of small business owners’ succession plans by Sellability Score, found that small business owners’ expectations for retirement have changed. Since 2008, almost half of business owners over age 50 have delayed their retirement due to economic conditions.
Despite the delays in retirement, all is not doom and gloom. Some three-quarters of business owners surveyed say they expect to exit their company in the next 10 years, and 40 percent expect to exit in the next five years. More than half of the business owners had already owned their companies for at least eight years.
What do small business owners expect to happen to their businesses when they leave?
Passing a business down from one generation to the next is becoming less popular; just 1 in 10 surveyed say they expect to pass their business on to their kids. By comparison, 61 percent expect to sell it to an outside buyer, while 10 percent expect to sell the business to a partner or key employee.
Meanwhile, 14.5 percent plan to essentially work until they drop, and 8 percent plan to just shut the business down entirely when they retire.
When they do leave their businesses, one-third of respondents expect the sale of their businesses to fund at least half of their retirement. However, those dreams might well turn out to be pipe dreams, given that a whopping 90 percent of business owners don’t have a formal exit plan in place.
The survey findings also suggest that small business owners may be underestimating the complexity of selling a business. Just one-third say they expect selling their business to be difficult. However, the majority of businesses in the study were in service industries—which often find it more difficult to sell since these businesses are more likely to be dependent on the owner’s personal efforts to land and keep new business.