Only 1% of small business owners tempted to be employees again!

Despite the pressure of running a business and the growing mountain of red tape, the UK's business owners aren’t looking to get out and sell up, according to research published earlier this year by chartered accountants and business advisers, MacIntyre Hudson.

43 per cent of company owners say that they are too concerned with running the business even to consider an exit strategy. Only 20 per cent have a detailed plan of what they want to do, while 53 per cent have no plans for exit or are planning to stay in the business for at least another ten years. Even the older age groups seem to be in for the long haul: 1 in 3 owner managers over the age of 50 don’t want to consider an exit plan and only 26 per cent have a detailed plan of what they want to do.

The research did, however, reveal some of the strains of running a business. 41 per cent of owner managers say that the prospect of a better quality of life might tempt them to get out of the business, while 26 per cent cite red tape and regulation.

However, the alternative of becoming an employee is seen as highly unattractive, with only 1 per cent of business owners tempted.

Mike Kay, Corporate Finance partner at MacIntyre Hudson, commented on the findings: “It is quite understandable that owner managers want to get on with running the business, but considering selling up doesn’t necessarily mean selling out. Given that it takes an average of three to five years to prepare a business for sale, and that a business primed for sale can gain around two or three times more than one where the owner has refused to think about planning, there is rarely a bad time for owner managers to crystallise their plans for the future.”

“It is surprising that such a high proportion of those over 50 do not want to consider their exit from the business. As a result, many of these people will be working beyond 60, whether they want to or not. Moreover, the research indicates that owner managers are keen not to be an employee again, but without proper planning that is exactly what will happen. If the company is not prepared for a sale, it will only be able to realise its full potential through an earn out, which is often conditional on the seller working for the acquirers for a number of years."

“Even for the younger age groups, an exit strategy helps to focus the mind on the reasons why they are in business. A serial entrepreneur is always looking for the exit and the next opportunity whilst those running established businesses should consider an exit strategy as part of their business plan however far off it is perceived to be.”

The survey also found that 56 per cent of owner managers expect that they will eventually dispose of their business through a trade sale, with 19 per cent expecting to pass the business onto their children and 16 per cent anticipating a management buyout. However, Gordon Brown's changes to the tax regime have made little impression. Although the Chancellor has tried to make it easier for owners to sell their businesses through Capital Gains Tax Business Asset Taper Relief, only 10 per cent of owner managers believe this will help. The majority believe it makes no difference, while 30 per cent are not even aware of it.