Small-business owners planning to exit their businesses for retirement or other reasons may be in for a rude awakening.
New research conducted by Securian Financial Group shows that the vast majority of small-business owners are unprepared for exiting their businesses. The financial ramifications, especially for business owners counting on their companies to fund their retirement, could be significant.
“While 54 percent of business owners plan to leave their business in the next 10 years, 72 percent have taken no exit planning action,” said Andrew O’Brien, who directs Securian’s business owner client solutions group. “For most small business owners, the business is by far their largest asset. Not properly planning for the sale or transfer of their business can leave a lot of people—including the business owner—in a very difficult position.”
The study found that 50 percent of small -business owners want to sell their business to a partner, a key employee or a third party, while 37 percent want to transfer the business to family members.
“A sale or transfer of a business involves multiple financial and legal steps that tend not to work well for the owner when rushed,” said Channing Schmidt, who leads a team of Securian associates who advise financial professionals and their business-owner clients on advanced planning. “A written exit plan developed by a team of experts working in concert with the business owner is the best way to prepare for a successful transition.”
Six hundred small business owners with an average of 27 employees and annual revenue ranging from $250,000 to more than $20 million were surveyed in August and September of 2015 for the Securian Small Business Owner Life Stage Study. More information is available at www.securiannews.com.