The FINANCIAL -- Sixty percent of business owners are
confident their business will continue to be successful after they
retire, according to findings from the Merrill Lynch Affluent Insights
Survey: Business Owner Spotlight, announced today.
However, only 35 percent of business owners with $10 million to $250 million in revenue said they are very confident in their personal wealth management strategy’s ability to meet their financial and life goals if they were to stop running their business today.
Additionally, only 39 percent of business owners worked with a management consultant, personal financial advisor, or commercial banker to develop their succession plan. As Bank of America reported, many business owners have not worked with a personal financial advisor and/or commercial banker to prepare their personal finances for possible scenarios in which they will no longer be actively running their business (33 percent).
“The best succession planning strategies evolve and require frequent evaluation. A transfer of ownership or management could happen on a timeline as planned, or come as a result of sudden or unforeseen circumstances,” said John Thiel, head of Merrill Lynch Wealth Management. “That means business owners must take a holistic view of both personal and business finances. It is important that business owners are prepared for a variety of situations, not only so their business can seamlessly continue running after a transition, but also so their personal finances can continue to support their financial and life goals.”
When asked who they would trust to take their place if they were forced to stop running their business today, half (51 percent) of business owners would choose a current employee, followed by a family member (24 percent). One in five (21 percent) however stated they’d have to hire someone from outside their business. If someone were to take over their company today, business owners would be most concerned with financial management (23 percent), leadership succession (20 percent), and business development and growth (16 percent).
Looking ahead to 2013: business owners focused on growth. When asked what the one greatest opportunity for business growth in 2013 is, business owners cited: Introducing new products or services (24 percent). Taking advantage of new technologies that can improve their business (24 percent). Targeting a new kind of customer (21 percent). Expanding domestic locations (21 percent).
Even though business owners have faced a turbulent economy as a result of global economic events the past two years, more business owners say they hired people (30 percent) than laid employees off (22 percent). Other business changes included: targeting a new customer base (38 percent), expanding operations to take advantage of new opportunities (37 percent), and changing product or service to better meet market demands (35 percent).
“Business owners face dual challenges in both managing the finances of their business while also planning their own financial future,” said Martin Richards, Enterprise Client Coverage executive. “They want to make sure that their business thrives and grows, meeting business goals while building, managing and preserving their personal wealth. We understand the challenges this presents and how those needs intersect and change. Our commitment is to connect these business owners to the capabilities and expertise across our company to enable them to meet their business and personal financial goals.”
The majority of businesses are focusing their operations on domestic markets, with 89 percent receiving less than half of their revenue from international operations and sales. However, when looking to the next five years, one in five (17 percent) business owners plan to expand their business internationally. While the majority of business owners are prioritizing domestic markets for the immediate future, one-third (32 percent) do believe that the benefits of international expansion are worth the risk.
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