3 in 4 Welsh businesses have no exit strategy

New report supports calls for employee ownership to be at the heart of business succession planning in Wales

5 Jul, 17

A new report published today (Wednesday 5th July) shows that as many as three out of every four Small and Medium Sized Enterprises (SMEs) in Wales may not have planned for the future transfer of their business.

The report, ‘Rooted and resilient: The case for employee ownership in the Welsh private sector’,  was commissioned by Social Business Wales in partnership with Welsh Government in response to anecdotal evidence that suggested that Welsh SMEs are not actively planning their succession. Research agency, Wavehill, undertook a survey of over 300 businesses across Wales to ascertain their readiness for business transfer and how they would expect to approach it.

Evidence shows that employee owned businesses are resilient and are more likely to grow in tougher economic times

Derek Walker, Wales Co-operative Centre

It showed that across Wales, awareness of the need to plan for the future ownership of businesses is low and many business owners are not aware of many of the issues involved in planning for succession, or the dangers of not starting the process early enough.

 

Image Caption: Kees Huysmans, owner of Tregoes Waffles, with Paul Cantrill and Sarah Owens of Social Business Wales

The report calls for serious consideration of employee ownership as a viable approach for owners looking to plan their exit strategy. It says a gradual management transfer process to employee ownership can ensure relations with employees, customers, suppliers and the local community are sustained once the founder has exited entirely.

The research suggests that there is an opportunity to embed employee ownership in longer term SME business planning in Wales. Broadening the awareness and understanding of employee ownership as a business succession approach offers a way for many more SME owners to realise the value of their business in a way that creates benefits for themselves, for their employees and for the local economy.

This report helps to identify and raise awareness of the issues that face businesses in Wales in planning their future

Ken Skates, Welsh Government Cabinet Secretary for Economy and Infrastructure

In terms of support, Social Business Wales, which is funded by Welsh Government and the European Regional Development Fund and delivered by the Wales Co-operative Centre, was clearly seen by the stakeholders interviewed for this study as the ‘go-to’ support service for employee ownership support in Wales.

Gateway Dental Practice
Image Caption: The team at Gateway Dental Practice with Paul Cantrill from Social Business Wales

The report concludes that recently introduced tax exemptions and the focus on business growth in Wales supports approaches for developing employee ownership as an integral part of a wider business succession offer in Wales.

The Employee Ownership Association (EOA) asserts that employee owned businesses contribute £30bn GDP to the UK economy annually.

Derek Walker, Chief Executive of the Wales Co-operative Centre, said:

“Employee ownership offers a succession approach that is fair to everyone. Business owners can leave their business in the knowledge that they have got a fair price for it and they have also ensured that the future of their employees has been safeguarded. Employees get to take control of their own destiny and continuity of supply is assured for suppliers and customers.”

“Evidence shows that employee owned businesses are resilient and are more likely to grow in tougher economic times. When employees retain ownership of a business it is much harder for that business to then be sold to external competitors allowing it to continue to grow whilst staying firmly rooted in the community it was started in.”

Welsh Government Cabinet Secretary for Economy and Infrastructure, Ken Skates said:

“This report helps to identify and raise awareness of the issues that face businesses in Wales in planning their future. Evidence show that employee owned businesses are resilient and more likely to grow in tougher economic times. As a Government, we are committed to working closely with businesses to help them to thrive and grow.

“As Wales has a high proportion of small and medium sized businesses it is important, through Business Wales and through Social Business Wales, that we are able to provide appropriate support to businesses so that they can continue to grow whilst staying firmly rooted in the community.”

For further information about employee ownership, please visit http://bit.ly/rooted-and-resilient. The executive summary of ‘Rooted and resilient: The case for employee ownership in the Welsh private sector’ is available to download from today.