A staggering 41 percent of entrepreneurs will leave their small business behind in five years. This was the finding of a report by the global financial services firm UBS (NYSE: UBS), looking at business ownership and entrepreneurialism in modern America.
Business Ownership Statistics
The UBS Investor Watch ‘Who’s the Boss?’ report found that nearly 60 percent of wealthy investors would consider starting their own business, yet at the same time, more than 40 percent of existing small business owners are preparing to exit from their business. Of the 41 percent of business owners planning to leave their business in the next five years, half plan to sell their business.
The UBS report highlights how entrepreneurialism is thriving in the United States and there is a growing belief amongst wealthy investors that owning a business is one of the most sought-after and prestigious careers to pursue.
However, the report also shows when it comes to selling a business, small business owners need to be adequately prepared for the sale. Being unprepared for an exit plan can result in a company being sold for an unsatisfactory price.
One way to prepare a business for sale is to have a formal exit strategy in place. The UBS report warns business owners may be underestimating what is required for a successful sale, stating:
“Business owners may be underestimating what’s required for a successful sale. In fact, 75 percent of owners planning to sell believe they could do so in a year or less. However, 58 percent of business owners have never had their business appraised, and 48 percent have no formal exit strategy in place. Most expect a competitor to buy their firm, ahead of employees, large companies or private equity firms.”
The report also highlights how heirs are often reluctant to take over a business. Amongst business owners who are planning to keep the business in the family, 89 percent said their potential heirs show a lack of interest in the family business.
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