Some 63 per cent reveal they want to keep their business in the family, with 48 per cent of respondents planning to leave it to their children and 13 per cent to a spouse, according to a study of 837 employers by Close Brothers Asset Management.
However, 13 per cent haven’t even thought about succession planning, and well over four in ten (45 per cent) SME owners don’t have plans in place to extract profit from their business when they retire.
The likelihood of an owner being succeeded by their children varies by industry. Those in the transport industry are most likely to pass on their business to the next generation, with three quarters (75 per cent) stating this.
Those in the wholesale and distribution industry are least likely to pass on their business, with 43 per cent stating the same – below the national average.
More than a quarter (26 per cent) in the construction industry admit to not thinking about plans for succession.
Patrick Haines, regional head of advice at Close Brothers Asset Management says, ‘SMEs are the building blocks of the economy, and their longevity is crucial. Many are already multi-generation family businesses, but whether a company is newly formed, or centuries old, it’s encouraging that the majority of SME owners plan to protect their business and its heritage.’
Although people are looking at succession planning there are many that aren’t looking at the tax implications that come with their retirement.
Well over four in ten (45 per cent) SME owners don’t have plans in place to cope with the tax implications of extracting profit from their business when they retire. Furthermore, 8 per cent have no understanding at all of the tax implications of taking profit from the business.
Haines continues, ‘Business owners need to ensure they have the relevant plans in place to maximise profit from their business when they retire to help fund their retirement. The hard work that goes into setting up and running a business can be lost if proper planning isn’t in position when approaching retirement.
‘This can be simple if business owners seek the right guidance early, placing them in a stronger position to protect their wealth.’
Further reading on family businesses
