Most SME owners haven't planned their exit

29 August 2018


Most SME owners haven't planned their exitOver three-fifths of business owners have no succession plan in place and do not know how they will leave their business, according to a new study.

The latest Future Attitudes report from Aldermore has found that 62% of SME leaders admit they don't have an exit strategy. In fact, younger business owners are more likely to have planned their eventual departure than older entrepreneurs - with 56% of those aged 18-34 having a succession plan in place.

The findings also show that 64% of bosses of UK SMEs have no clear plan in place to ensure that their business does not suffer when key staff leave - despite the fact that 45% of business owners polled say the biggest threat to their business is the departure of a senior executive.

For bosses who haven't planned their departure, 33% say this is because they don't ever plan to leave the business, while 28% say they are currently focusing on building the business. A quarter say their departure is too far in the future to plan for now.

For business leaders of all ages who have already planned their exit, the most common "out" is liquidation (29%), followed by handing over the business to senior colleagues (25%) or to family members (23%).

Other options include selling the business to another company (cited by 21%) or selling to a private equity firm or other investor (16%).

"For UK SME leaders who have planned their own departure, our research tells us that on average, they aim to leave their company in just under four years' time," said Carl D'Ammassa, group managing director, business finance at Aldermore. "What is troubling is that there are fewer senior executives with formal business succession plan compared to a year ago.

"Running a business can be very time-consuming, with ongoing demands from customers and staff. These challenges exert substantial pressure on leaders, so it is vital that a succession strategy is planned out to ensure businesses across the UK do not suffer when changes to key executives occur."