Member Article

SMEs failing to make plans for leadership departure

SME businesses in Yorkshire are failing to make plans for their long-term future, with over a third (35 per cent) of firms currently having no plans for after the main directors or owners retire, according to research carried out by Lloyds TSB Commercial Banking.

This compares to over a third of companies (34 per cent) nationally that have no plans in place for when the main directors or owners retire. Firms in London and Essex were the least likely to have made post-departure arrangements (43 per cent), compared with 28 per cent in the South West.

The survey of almost 1,800 businesses also revealed geographical differences in transition plans across the UK.

Scottish and Welsh firms are most likely to remain in family hands (34 per cent each), while a third (33 per cent) of companies across the South West believe that a managerial exit would lead to a complete trade sale including goodwill.

The highest proportion of companies in Yorkshire (28 per cent) expect a succession by family members.

While almost a quarter of businesses (24 per cent) nationally expect the owners’ departure to lead to complete trade sale, reassuringly, only one in 20 (five per cent) of firms across the UK expect the departure of the directors or owners to lead to a complete wind-down of business.

Leigh Taylor, regional director for Lloyds TSB Commercial Banking in the Midlands and North, said: “For many small business owners, selling the company upon retirement may be a large part of their pension plan.

“And for an established and successful business, the retirement of the founder or directors can mark the beginning of a new chapter in its development as new leadership takes over, and should not necessarily signal an automatic end of the road for the company.

“When producing a business plan, it’s as important to include a long-term exit plan as it is for future expansion possibilities. As a company grows so too does its workforce, whose livelihoods can be dependent upon the company’s continuing success.”

This was posted in Bdaily's Members' News section by Mark Lane .