Successful businesses take lifetimes to build, but many business owners throw away their life's work by failing to plan for succession and their retirement. Statistics from RMIT confirm that 66% of privately owned businesses do not see themselves as succession-ready, and moreover, that over half don't intend to do anything about it in the next 12 months.
There are many different factors at play which can lead to an owner's reluctance to properly consider succession. Firstly, many owners/entrepreneurs suffer from a bias against planning; they are adept at running the business and coming up with the ideas which make their business successful, but often they need help to think more long term. There is also a natural reluctance for a business founder to let go of control over their creation. This can be because the owner has so closely identified his/her sense of self worth to the business, that they fear for their future without it; or they may fear retirement itself, particularly if they have no meaningful post-retirement plans.
Business succession can be particularly challenging for family businesses, where there can often be disagreement among family members regarding succession options. There can be a strong desire for long-established family businesses to keep control within the family and many such families regard themselves as custodians of the business for future generations. However, there may not be ready-made successors within the family and those who are willing to take over may not be qualified, while those who are qualified may prefer to do something else with their lives. Management of family succession carries many inherant pitfalls and can greatly benefit from the assistance of an experienced accountant.