Succession - the Death Knoll for Small Businesses?

By Preece, Tom | Management Today, January 1998 | Go to article overview
Save to active project

Succession - the Death Knoll for Small Businesses?

Preece, Tom, Management Today

The contribution made by small businesses to the UK economy is widely accepted. Employment in family businesses alone accounts for 50% of non-public sector employment and, of the UK's top 8,000 businesses, 76% are family owned.

Some of the UK's most innovative and enterprising companies are family businesses. Sainsbury, John Menzies, Littlewoods and Clarks are among the better known companies which began as family concerns, yet research shows that very few family companies actually survive to the second generation.

A recent survey conducted by Business Pages has shown that 42% of small businesses find that day-to-day survival takes precedence over planning for the future. 43% of those surveyed have made no plans for the succession of their business.

Whether a founder is unwilling to relinquish control or pass on the personal relationships that they have built during their time with the business, the fact remains that without a plan for succession the future of the business is threatened. In addition to the financial burdens of inheritance tax and capital gains tax, a decision by the majority shareholder to sell their shares following the death of the founder may bring an end to the company. The Business Pages survey found that small firms (particularly those with a turnover of less than [pounds]100,000) thought their business would have no future beyond their death/retirement.


Since every company is different, there is no one solution, but there are some basic principles that all can follow. Most important is to allow plenty of time to plan. The sudden death of a proprietor or major shareholder will leave a company completely unprepared and could have serious consequences.

Succession is one of the major causes of tension in a family. A good way to help minimise possible conflicts is to involve as many family members as possible in the planning process. Non-family employees should also be involved where appropriate. A detailed plan for succession should be approved by all those concerned and checked by legal advisers. The process for choosing a successor should be clearly defined as should be the role of the successor. Retirement dates should be set and the management plan and business goals agreed and documented.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Succession - the Death Knoll for Small Businesses?


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?