Among those surveyed, nearly seven out of 10 owners (66%) report they do not have an exit plan to transition their business in the event of death, disability or retirement. Instead, owners focus on growing their business (70%) followed by achieving business stability and remaining active in the business after retirement (both 47%).
"Recent market events have forced most people to reassess financial priorities, but the task looms larger for business owners who must take stock of their personal and business needs," said Steve Parrish, national advanced solutions consultant for the Principal Financial Group. "Many owners said their retirement plan is to never retire, while others plan to fund retirement by selling their business. By not developing a plan to exit their business, they leave it vulnerable to be sold for less than it’s worth, creating a negative financial impact for themselves and their family."
Desires vs. Reality
The findings also indicate business owners’ stated priorities often do not match their actions.
- Health insurance was the top priority for business owners, yet more than half of owners (58%) do not currently offer this benefit.
- Business protection followed in importance, but according to the survey, six out of 10 (61%) do not have plans in place to help them protect their business in the case of death, disability or termination of key employees.
- Retirement plans came in at number three, yet only about one in five (19%) offer a 401(k) plan to employees.
"Our research clearly demonstrates owners are torn between their desires and their current reality," notes Parrish. "The economic environment highlights the importance of preparing for the unexpected. While it’s understandable individuals will focus on the short term now, they need to make time to plan for their future so they can protect their business and meet their financial goals."
