TODAY we are very happy to be sharing a Blog by Tom Kirk that relates to the Transition Roadmap Developer in a great way. Tom has not only been a client of vNacelle, he now consults on the financial planning/wealth management aspects of the business transitions we facilitate throughout the TRD Process.
You can find the original article here:
The 99% Business Death Rate
By Tom Kirk
March 28, 2018
A statistic that most people have heard before is that 96% of all small businesses do not survive beyond 10 years1. One that is perhaps less familiar is that 70% of small businesses do not survive an ownership transition2. These two statistics combine to what I am calling the 99% business death rate – 99% of businesses will not survive more than 10 years and successfully transition their ownership.
Those are pretty staggering odds. Especially when you consider the multi-trillion dollar generational wealth transfer going on right now. This wealth transfer consists of not only 401k plans and IRAs, but also valuable interests in closely held small businesses that were created over a lifetime of effort and accomplishment. What can be done to beat these odds? Read on.
Year after year small business owners invest and re-invest their time, energy and capital into their company. And it has often paid off very well, providing a good livelihood for them, their families, fellow workers, and owners. But the business of running a business is so all-consuming that little thought has been given to the answers to tough questions. For example:
- What would happen to the business, its employees and customers if an unforeseeable tragedy happened to one or more of the owners?
- How much longer do you want to keep working at your current pace?
- In addition to what has been saved for retirement, how much more capital will be necessary to continue to live as you desire for the rest of your life?
- What possible business transition options should you consider from the multitudes of ideas and tactics that are available?
These are not easy questions to answer. They are often only addressed after a crisis strikes like the death or disability of an owner. By then your choices can be severely limited. This all contributes to the above mentioned 99% business death rate.
We are participating in more and more conversations about business transition planning with clients and prospective clients at our fee-based wealth management firm in Satellite Beach, Florida. If you are a business owner who knows you aren’t going to work forever; you have much of your net worth tied up in your small business; and you want to beat the 99% business death rate; call and schedule your complimentary consultation with one of our Wealth-Coaches to see if The Transition Roadmap DeveloperTM is the process you may want to investigate for improved clarity and intentionality in this critically important area of your personal and business life. Call today!
1Carmody, B. (n.d.). Why 96 Percent of Businesses Fail Within 10 Years. Retrieved November 28, 2017, from https://www.inc.com/bill-carmody/why-96-of-businesses-fail-within-10-years.html.
2Williams and Preisser, 2003.
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