Exodus of entrepreneurial skills from UK’s businesses

More than one quarter of the UK’s SME owner-managers might sell their business in the next few years. Research undertaken for the Tenon Forum shows a worrying trend that could leave Britain gasping for entrepreneurial skills and venture capital in the years ahead.

The research showed that 66 per cent of those who are thinking about selling have no plan to reinvest the capital they earn from the sale into another business and only 5 per cent are considering re-investing the majority of the capital. Capital gained from sale is often used as venture capital to help companies with high growth potential move on to the next stage of their growth.

It is no surprise that some of Britain’s hardest working and most experienced business leaders are hoping to drop down a gear in the near future. What is worrying, however, is how many wish to opt out of business altogether. 50 per cent of the UK’s owner-managers stated that once they sell their organisation they have no plan to stay actively involved in business.

The bi-annual research, conducted by GfK NOP on Tenon’s behalf, questioned managing directors, financial directors and senior directors of 500 small and medium-sized businesses for analysis by the Tenon Forum, an independent think-tank of entrepreneurs.

The research follows a trend from Tenon Forum’s Wave 7 research undertaken six months ago which showed that a similar proportion was hoping to sell within the next few years. The sector with owner-managers most keen to depart still remains retail, leisure and utilities.

British business leaders have been regularly surveyed for the Tenon Forum about their level of business confidence and this same sector is always one of the least confident.

There were huge disparities between different sectors especially with regards the owner-managers’ intentions post-sale. Of the manufacturing industry, 54 per cent were keen to re-invest the money earned from their sale, while a mere 12 per cent of the construction industry would do the same.

As to staying involved in business, manufacturers were again the most intent to remain in business with three quarters saying they would not leave the scene completely, while only 21 per cent of leaders in agriculture, mining and fishing could say the same.