Vulnerability is particularly great in agriculture, retail and industry, sectors with relatively many older entrepreneurs. Even in sectors where family businesses dominate, such as agriculture, catering and car trading, failure to start succession plans in a timely manner increases the risk of business closure and loss of knowledge, jobs and capital. These 300,000 family businesses account for 30 percent of all jobs and added value.
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According to ABN Amro, the continuity of thousands of Dutch companies is under pressure. Of the entrepreneurs who want to stop within ten years, 20 percent are looking for a successor, but have not yet found anyone, and 22 percent do not yet have a succession plan, according to research by Ipsos I&O among 519 entrepreneurs.
The bank points out that in addition to practical, emotional factors also play a role. Entrepreneurs have difficulty determining business value, understanding tax rules and letting go of their business. “Many entrepreneurs realize too late how complex business succession can be,” says Gerarda Westerhuis, Leisure and Retail sector economist at ABN Amro.
Alternatives
Because younger generations are less likely to want to continue the family business, entrepreneurs are increasingly looking at alternatives such as management buyouts, employee buyouts or sales to strategic buyers. A phased transfer can help to limit risks and maintain trust among staff and customers.
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ABN Amro emphasizes that timely planning is crucial to limit risks and ensure continuity. “By starting early, entrepreneurs can explore all relevant options and align the interests of owners, management, family members and financiers,” says Westerhuis.