Entrepreneurs are risking failure by not coming up with a plan about how they will eventually exit the business, experts have warned.
The caution came after a report by accountancy firm Deloitte found almost three quarters of business owners have not given ‘adequate thought' to how they will eventually exit the business.
The report found while in more than 70% of firms, the founders are still heavily involved in running the business, almost four in ten still have no plans in place as to how they will leave.
While more than a third of entrepreneurs said they have no exit plan in place because they are 'waiting for an opportunistic approach from a third party', the report found many entrepreneurs who did not have an exit plan encountered problems.
Tony Cohen, head of entrepreneurial business at Deloitte, said: "More than 60% of family businesses are bought by private equity investors.
"Unfortunately, the lack of planning results in difficulties agreeing a price, with owners reluctant to give potential investors access to vital financial information. On the positive side, good succession planning can ensure the family firm maintains independent ownership and stewardship, albeit in a metamorphosed business structure.
"An exit is not something which can happen easily and time spent planning for the inevitably and structuring the business correctly is seldom wasted."
Good morning
I was very interested to read the article about business owners and exit planning, because I spend quite a lot of my time working in this are with north east business owners.
I oversee the Baker Tilly Growth Programme, a novel, and structured series of programmes which help owners with strategy, profit improvement, risk management, team development, and personal wealth.
Most of our work in these areas is grant funded via Business Link.
My favourite is the Strategy programme - helping business owners record their vision in a series of agreed objectives, and then agree an action plan to make it all happen. A very important part of this for most owners is consideration of an exit strategy.
Why not ask a well known local entrepreneur who has experienced a Baker Tilly Strategy project what she thought of the process? Si Bales for example!
Social bookmarking
Bookmark this article with the following social bookmarking websites: