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