SME owners looking to pass on baton through generations, says survey
14th November 2013 | News
Almost half of the UK’s small and medium-sized enterprises (SMEs) look to pass their company on to their children, according a study of more than 800 employers by Close Brothers Asset Management.
48 per cent of respondents plan to leave their business to their children, with almost two-thirds (63 per cent) planning to keep their business within the family as a whole.
The likelihood of a company owner being succeeded by their children tends to vary per industry, according to the survey. Entrepreneurs within the transport industry are most likely to pass on their business to the next generation, with 75 per cent saying so.
At the other end of the spectrum, those in the wholesale and distribution industry are least likely to pass on their business to their children, with only 43 per cent stating this intention – below the national average.
Perhaps more worryingly, almost half (45 per cent) of SME owners surveyed admitted they did not currently have a plan in place to extract profit from their business when they are ready to retire.
Although some business owners are considering succession planning, there aren’t many looking at the overall tax implications that come with retirement. In fact eight per cent of small business owners surveyed admitted to having no understanding at all of the tax implications of taking profit from the business.
Patrick Haines, regional head of advice at Close Brothers Asset Management, said: "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."
Mr Haines continued by urging business owners to have "the relevant plans in place to maximise profit from their business" when they time comes to retire.
"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," he added.
"This can be simple if business owners seek the right guidance early, placing them in a stronger position to protect their wealth."