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 3^rd 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 3^rd 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