04-12-2007 Back to news index
Practice owners risk not getting the right price when it comes to selling their business because they don’t plan for succession, according to new research announced recently by Business Link. Ninety per cent of Business Link advisors found that succession planning was not a major part of business planning.
Not getting the right price for their business when the time comes to sell is the biggest risk that owners face by not planning their business succession at an early stage, according to the experts who contributed to the survey. Other key findings from the research highlighted that not knowing how to plan the transfer of a business (33%) is the principal challenge encountered by owners looking at passing their business on, followed by the reluctance to let go (30%).
Jonathan Hollow, Business Links’ website editor said: “Businesses need to think about their long term strategy for succession from very early on. Passing on a business to a new generation or party can be a delicate and complex process. Planning the future of their business will help small business owners get the right reward for the time and effort involved in starting up and running a business.”
Respondents to the survey also said that 40% of owners are most likely to consider selling to an external party when looking for a successor, whilst 30% look within the company and 27% look to pass the business onto a family member. The research also revealed that businesses do not address succession planning early on because they have not thought about the long-term strategy of the business (55%) and are too busy starting up and running their business (30%).
This new research mirrors the findings of the Small Business Service 2006 Annual Business Survey, which revealed that 68% of respondents were unaware of what a business transfer plan is and only 5% have a written transfer plan in place.
Business Link has produced a website tool that takes owner managers through a series of questions about their business. It then produces a tailored report outlining the most suitable succession options for the business and key action points. To use the tool, visit businesslink.gov.uk/successionplanning.
For confidential discussion about succession planning at your practice, telephone Patrick Myers on 08700 620430. Click here for more information.