Business owners want their businesses to outlive them, but more than half have made no plans to make that happen, says Wilmington Trust.
Even older business owners seem to be ignoring their own mortality or desire to retire, according to a survey of 200 owners of privately held companies entitled “The Power of Planning” by Wilmington Trust.
Fifty-eight percent say they have no plan in place for transitioning their business to new owners and even 47 percent of owners over age 65 have no plan in place.
What is the reason they have not thought about their futures? More than three quarters (78 percent) say they are too passionate about running their businesses to think about passing them on. Forty-two percent say they are too busy and 44 percent feel any transition is too far in the future to establish a plan now.
“The reality is that planning effectively and running a business are not mutually exclusive,” said Matt Panarese, president of Wilmington Trust’s Mid-Atlantic region and leader of the firm’s National Business Owner Practice Group. “Owners don’t need to walk away from the business they’ve spent their lives building to start thinking long term.”
Of the 42 percent who have a plan, half say they have begun executing it and half say they have not.
Despite their lack of planning, business owners seem to know why they should be planning for a transition. Eighty-seven percent say their two top goals for a transition are to make sure the business remains viable in the long run and to take care of employees. Almost as many say they want to assure customers are taken care of (85 percent) and they want to ensure the financial security of their families (83 percent).
Wilmington Trust warns against relying on too few advisors to make a transition plan. More than 80 percent of owners say they need a tax expert (84 percent), lawyer (83 percent) and accountant (83 percent). Wilmington Trust says business owners should also consider a wealth advisor and an investment banker as critical experts to consult.
