Small to Medium sized enterprises (SMEs) are important to the way of life in New Zealand both for their economic impact on employment and productivity but also as a way of life.
Like many industrialised nations, New Zealand is experiencing a shift in the distribution of the age of the population.
This is due to the ageing of the ‘baby boom’ generation. As with the broad population business owners are ageing.
New Zealand faces a challenge in the coming years as the baby boomers begin to retire. This challenge is uniquely personal to each and every business owner.
However, with great challenges come great opportunities. For business owners and policymakers, there is a chance now to take stock and plan for their exit before it is too late.
Prior research present that this “shift in the demographic profile may have profound consequences for individuals
and the country alike, in terms of firm survivability, firm market valuations, retirement conditions and employment
statistics.”
Therefore, it is critical for policymakers, business owners and researchers to understand how ready business owners are
for their eventual exit and how to best support business owners as they prepare for the next stage in their entrepreneurial
journey.
The research found through examination of the data that there was not statistically significant correlation between
the age of respondents and the level of preparation.
Although business owners are aware of the importance of succession planning there is a low level of both formal and informal succession planning across all age groups.
As one would expect there was a statistically significant correlation between the age of business owners and their exit timeframe. This correlation of held that as business owner’s age increases their intention to exit in the short
term increases.
To help understand the exit intentions the research identified that younger respondents are more likely to exit
to start a new venture, while older respondents would exit to retire.
Respondents have a preference for the sale of the business 63.4% (n. 92) as the most
popular exit modality. However, entrepreneurs of different ages have different preferences for exit modalities but
broadly have a preference for the sale of the business.
SMEs in New Zealand firms lack succession planning. Due to the small number of firms that have written succession plans, the research has failed to identify a strong relationship between the size of the firm, the number of employees or revenue with business succession plans.
A full version of this report can be downloaded here. Ross Allen – The Entrepreneur, Age and the Exit. An Exploratory Quantitative Study of SMEs in New Zealand
