Few business owners have a succession plan

Massey University research has highlighted the ageing of small business owners and a lack of planning on how to get out of their businesses.

Researcher Martina Battista found that a bulk of business owners were nearing retirement but only 17 per cent had a formal succession plan.

The research surveyed a sample of 1342 businesses with fewer than 50 employees. It indicated the average age of the business owner was 52, with seven out of 10 owners aged 41 to 60.

The average owner had been in business for about 20 years and 64 per cent were planning to leave the firm in the next decade. More than half of those surveyed said they had no succession plan, and 34 per cent said they had thought about one but not formalised it.

Dr Battista said about 150,000 New Zealand businesses would transfer ownership in the next five years, with most intending to sell or pass the business on.

As well, 70 per cent of business owners were counting on the sale of the business to finance their retirement.

Tom West, senior small business analyst with the Economic Development Ministry, said the lack of succession planning was a concern, particularly as most business owners were hoping to provide financial security for their family from a sale.

The research showed business owners looked to their accountants, lawyers and family for advice on leaving the business. Business brokers and professional succession planners were low on the priority list for advice.

One in three owners had not consulted anyone about leaving their business.

- © Fairfax NZ News