Small businesses flirting with disaster by failing to plan

Failing to plan can be disastrous so succession planning should be part and parcel of every solid business plan, for even the smallest businesses

With only 19% of SME owners acknowledging they have a formal succession plan in place, there is a real need for all those without a plan to use the new year to develop a formal exit strategy, to avoid financial and emotional strain down the track.

The results of Bentleys’ latest Voice of Australian Business Survey show there is a need for many SMEs to consider their longer term plans – not only in the event of a planned or unexpected exit from the business, but also in terms of their retirement.

The national survey of SMEs revealed that 25% of owners who plan on exiting their business within the next five years had never considered the need for a succession plan. For those that are not planning an exit in the next five years, this figure rose to 30%. At the same time, the survey also showed that only 57% of SMEs have a retirement strategy in place.

While it is encouraging to see that a large proportion of SME owners intend on having their businesses continue after their exit, the best intentions can mean very little without the implementation of a comprehensive succession plan.

Succession planning should be part and parcel of any solid business plan, for even the smallest businesses.

The survey shows that a majority of SME owners intended for their business to continue without them, with only 12% of those surveyed intending on liquidating or closing down their business upon exit.

Though these findings are hopeful in terms of small business viability, the lack of formal succession planning is a cause for concern, especially as SMEs make up 96% of all businesses in the country, collectively employing 4.5 million people and contributing $330billion to Australia’s economic output.

It is important for SME owners to also to consider how they were going to fund their retirement, and ensure they have a formal plan for this too.

Everyone has heard the saying that failing to plan is planning to fail – unfortunately the reality of this can be devastating for a small business and its owners. Having a succession and retirement plan, however, can provide peace of mind and it need not be an onerous process. By putting a little bit of time and effort in early to set these up, small-business owners can avoid hours of stress and complications later in life.

This infographic will help you plan for your succession:

Business succession


Edi Carlesso, National Management Board and Director, Business Advisory Services, Bentleys Chartered Accountants and Business Advisory Services