Ageing Manawatu business owners are playing "Russian roulette" with the future of the region's economy through their reluctance to create a succession plan, Vision Manawatu warns.
With the average age of Manawatu business owners in line with the New Zealand average - 58 years old - the regional economic development organisation is looking at ways to push aside apathy toward planning the sale of businesses on retirement.
Earlier in the year Vision Manawatu held a survey to gauge how many business owners in the region had contemplated their exit strategy.
The results suggested owners were not planning, Vision Manawatu regional business manager Mark Hargreaves said.
"There's so many business owners out there that are just immersed in the day-to-day running of the business. They're working in the business and not on the business.
"As a result they are nowhere near as organised or planned as they should be for succession and to a certain extent they're playing Russian roulette."
Not planning would lower the value of the eventual sale of businesses which would have "far more downsides than upsides" for Manawatu's economy, he said.
Vision Manawatu is so concerned it is offering a small portion of its funding to businesses that can prove they are grappling with the idea of succession.
"If an exit strategy is deemed to be among the highest priority for a company then there is financial assistance available from us to help coach a business on how to do it themselves," Mr Hargreaves said.
Palmerston North-based business exit specialist Steve Davey said he had started offering the service six months ago, anticipating a need in the city.
Simple demographics were enough to prove there would be fewer business buyers and more business sellers in 10 years, Mr Davey said.
"If you think about the next 10 years with the baby boomers selling up and retiring, that is a lot of business properties that are going to be on the market.
"There's 4000 businesses in the region and if the average age of the owner is 58, that becomes quite scary."
Every business had different needs but a general rule was that every business with an owner over 50 needed a succession plan, Mr Davey said.
"There's a lot of people putting their heads in the sand about this and there needs to be a bit of a mindset change.
"If you come to me for help six months before you sell, the only thing I can really do is put a for-sale sign up and hope.
"But if there's a plan a few years before the sale, the signs probably won't even be needed."
- © Fairfax NZ News
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