Mergers and Acquisitions, Mergers and Acquisitions, Small business

Small Business Succession Plan: Got One?

5 Stages Business Scorecard
The IT entrepreneur's dream goes something like this: Launch, build, expand, enjoy and then exit (i.e., sell) your business at a lofty valuation. But here's the reality: For most small business CEOs, the required numbers for a successful exit just don't add up. In fact, most CEOs fail to develop a small business succession plan for their organizations. Consider these factoids, and their interdependence on one another:
  • 78 percent of small business owners plan to sell their companies to fund their retirement. ChannelE2E: So far, so good.
  • The proceeds are needed to fund 60 percent to 100 percent of their retirement needs. ChannelE2E: Oh my. Those are really, really big percentages. And they reinforce what HTG Peer Groups has told me repeatedly: Total Service Providers, MSPs and VARs frequently underfund their retirement plans.
  • Less than 30 percent of small business owners actually have a written succession plan. ChannelE2E: Game over for 70+ percent of small businesses if anything happens to the CEO.
Those stats come from a national survey of 182 advisors that specialize in small-business financial planning and are members of the Financial Planning Association. Basically, financial planners are saying (A) small business owners think their business is their nest egg but (B) those same small business owners have no idea how to nurture and hatch the egg at its full potential. The FPA/CNBC Business Owner Succession Planning Survey results were released in April 2015. Fast forward to the present, and I suspect few small business owners in the IT channel have taken corrective actions to (A) develop a succession plan and (B) properly fund retirement plans just in case a company sale doesn't deliver all the retirement dollars they need...
Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.