Survey: Few Small Business Owners Have Succession Plans in Place
April 14, 2015—Less than 30 percent of small business owners have written a succession plan, according to the Financial Planning Association (FPA)/CNBC Business Owner Succession Planning Survey.
This comes from a national survey of 182 advisors that specialize in small-business financial planning and are members of the FPA.
The survey reported that despite the low number of succession plans in place, 94 percent of financial planners have discussed developing a succession plan with clients.
According to the survey, 78 percent of small-business-owner clients plan to sell their businesses over the next 10 years as a means to fund 60 percent to 100 percent of their retirement needs.
The survey reported that significant reasons for the low figures in succession plans were the difficulty of emotionally letting go (33 percent) and actually finding a buyer (28 percent).
FPA members report that more than half of the small-business owners they advise sell their businesses to employees or family members (23 percent and 31 percent, respectively). Forty-two percent of those transactions are financed by installment sales, while earn-out arrangements (34 percent) and employee stock ownership plan (14 percent) were other options.