Report finds most SMEs lack succession plan

More than half of SMEs do not have a plan in place when it comes to exiting their business, according to a study by one accounting firm.

RSM Cameron Bird’s Think Big 2015 report revealed that 44 per cent of SMEs have an exit strategy, with 16 per cent of small-business owners planning to exit their business this year, 19 per cent in the next one to two years, 22 per cent in the next three to four years, and 41 per cent in the next five to 10 years.

Andrew Graham, national head of business solutions at RSM Bird Cameron, said these numbers will continue to increase over the next few years, particularly as more baby boomers head towards retirement.

“The most successful business owners are planning for their exit even as they plan for growth or expansion,” he said.

“Developing business strategies around the exit plan is a good way to keep the business on track and minimise risk."

The report also found that proceeds from the sale of the business will be the primary source of retirement funds for approximately 30 per cent of respondents – slightly less than in 2014.

“This demonstrates that there is not a significant reliance on the sale of the business for retirement funding, which could be due to ongoing segregation of assets away from the business, particularly through the use of superannuation,” Mr Graham said.

“The reduction in the number of business owners using the sale of the business as the primary source of retirement funds could also reflect improving investment returns over the past few years.”

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