Experts in the field of family businesses consistently urge business owners to make provisions—for example, in the event of a sudden serious illness or even the death of the founder. After all, it happens time and again that a company then begins to falter or even slides into a crisis that threatens its very existence.
Clearly, however, there remains a need to promote contingency planning for emergencies. This is evident from the results of a survey conducted by The Alternative Board, a company operating as a franchise system. The Alternative Board offers consulting and coaching services to business owners and executives. The survey included 165 business leaders from small and medium-sized enterprises.
Succession Without an Emergency Plan—12 Percent Fear a Business Crisis
For example, 81 percent of respondents do not have a contingency plan, 61 percent have not made adequate provisions for succession in their wills, and 65 percent have given little or no thought to the issue. Another finding shows that 12 percent believe their company would be at risk if they were to become incapacitated.
When it comes to succession planning, there is no overwhelming majority opinion. 46 percent of respondents would like their own children to take over the business. 37 percent of respondents would prefer that their own employees continue to run the company. However, the current generation of business owners does not view the succession situation entirely through rose-colored glasses: 27 percent of them fear that their designated successors will not fulfill their wishes and take over the business. 26 percent believe that the chosen successors are not yet sufficiently prepared for the new role.
The Challenge of Business Succession: Over a Third Need Professional Advice
Business owners have clear ideas about when they want to retire. 68 percent of business leaders would like to hand over their business to a successor before their 65th birthday. 24 percent are willing to continue working as entrepreneurs beyond the age of 65. Many do not want to part ways with their company completely and abruptly: 24 percent of those surveyed want to remain at their company’s service as regular consultants even after stepping down, while 46 percent want to advise their company occasionally on strategic issues.
A significant proportion of respondents acknowledge that they will need advice regarding succession. 35.8 percent report that their need for advice will be high. In contrast, 41.2 percent will need advice only on specific issues, such as tax law.
