A survey finds seven out of 10 business owners report they don’t have an exit plan to transition their business in the event of death, disability or retirement.
Instead, according to the survey released recently by Principal Financial Group, owners focus on growing their business (70 percent) followed by achieving business stability and remaining active in the business after retirement (both 47 percent).
“Recent market events have forced most people to reassess financial priorities, but the task looms larger for business owners who must take stock of their personal and business needs,” said Steve Parrish, national advanced solutions consultant for the Principal Financial Group. “Many owners said their retirement plan is to never retire, while others plan to fund retirement by selling their business. By not developing a plan to exit their business, they leave it vulnerable to be sold for less than it’s worth, creating a negative financial impact for themselves and their family.”
The findings also indicate business owners have priorities but most aren’t following through with them. Health insurance was stated as a top priority, but 58 percent currently don’t offer the benefit. Retirement plans were the third most important, but only about 19 percent offer a 401(k) plan.
“Our research clearly demonstrates owners are torn between their desires and their current reality,” notes Parrish. “The economic environment highlights the importance of preparing for the unexpected. While it’s understandable individuals will focus on the short term now, they need to make time to plan for their future so they can protect their business and meet their financial goals.”