According to a recent poll1 of small-business owners, 24% have a succession plan for their retirement.
When asked about how the business would be handled at the time of retirement:
· 23% of the owners said they would simply close the business
· 20% of the owners said they would sell the business to a 3rd party
· 18% expected to transfer the business to a member of the family
· 12% said the business would be sold to a partner or employee
· 27% were not sure what would happen to the business
It seems that 3-out-of-4 owners of small businesses either (1) see no need to set a succession plan or (2) see a need for a succession plan but don’t get around to creating it. About 1-out-of-4 owners intend to simply close the business so they do not see much need for a succession plan. About 1-out-of-4 owners don’t know what would happen to the business…apparently they can tolerate the ambiguity. The remaining 2-out-of-4 owners – 50% of owners – anticipate the formal transfer of their business either to a 3rd party, a family member, a partner, or an employee.
Putting this into a few perspectives:
· For employees of small businesses: If you work at a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer.
· For clients of small businesses: If you buy products or services from a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer.
· For suppliers to small businesses: If you sell products or services to a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer.
Footnote:
1. TD Waterhouse’s early October 2011 Business Succession Poll of 609 small business owners