Too many small and medium-sized enterprises (SMEs) are failing to make long term succession plans for their future.
This leaves them open to risk and decreases their chance of success, according to a study carried out by Lloyds TSB Commercial Banking.
It showed that more than a third of SMEs currently have no plans for their long term future, Including what they would do if their directors or owners go into retirement.
London and and Essex are the two places least likely to have a succession plan in place at 43 per cent, compared with 28 per cent of firms in the south-west who haven’t made any post-departure arrangements.
The report also highlighted a number of other trends, including geographical differences in transition plans across the UK.
Of the 1,800 firms surveyed, 34 per cent of Scottish and Welsh firms are most likely to remain in the family, while 33 per cent in the south-west believe they would sell the firm if they are to retire. In the West Midlands 27 per cent of companies believe their exit would compel a family member to take over.
In terms of industry, firms in the energy sector are the least prepared for the departure of an owner or director, with 41 per cent having no succession plan in place. This is compared to 26 per cent in the real estate and financial services businesses.
For many small business owners, selling the company upon retirement may be a large part of their pension plan.
But Leigh Taylor, regional director for Lloyds TSB Commercial Banking, believes this doesn’t have to be the beginning of the end.
She said: “For a business, the retirement of the founder or directors can mark the beginning of a new chapter in its development as new leadership takes over and should not necessarily signal an automatic end of the road for the company.”
Posted by the Secret Businessman