Destination Succession: The
Business transition statistics in Nebraska bring both hope and concern for the future
BY MONICA BRAUN, REAP
SOUTHEAST 1 DISTRICT BUSINESS SPECIALIST
In May, the Federal Reserve Bank of Kansas City, Creighton University School of Law, and the Nebraska Business Development Center (NBDC)-Wayne State College hosted seminars across the state addressing Business Succession.
Some of the statistics were interesting and provide optimism and opportunities. Some of the statistics were frightening in terms of small communities and the businesses located there.
There are approximately 151,000 small businesses in Nebraska of which 44,703 firms have one or more employees. Nebraska had more firm “births” per capita than the nation at large. That’s exciting.
Over 66 percent of small business owners expect their business to remain in the family while only 35 percent actually survive to the second generation. Owners think there is plenty of time. Two out of three firms lack a written strategic plan, most have no plan at all. That’s a little scary.
If the situation is that there are no children interested in or capable of taking over a business, it’s likely it will close. However, the largest group of persons who have thought about owning their own business are in the age range of 18-29 years. The opportunity to groom someone else to take over a small business in our local communities is very real.
Consequences for not maintaining the local businesses in our communities include:
- Lost storefronts and services.
- Lower tax revenues.
- Loss of social and political power (41 percent of rural business owners are community leaders).
- Loss of philanthropy (91 percent of small businesses contribute to the local community).
- Loss of community development assistance (65 percent of rural business owners contribute cash or technical assistance).
There are some actions we can take together to help with business transfers.
- Assist business owners in identifying a team of advisers.
- Create awareness of the consequences for the community.
- Identify potential candidates for a business transfer.
- Reach out to successors.
- Involve youth, which will encourage them to consider returning to their hometown and becoming a business owner.
Many reasons exist for business transfers, and it’s important to recognize them. They include:
- Change in ownership.
- Desire to return to the workforce.
- Owner illness or disability.
- Financial stress.
- Loss of passion for the business.
- Change in market conditions.
- Change in lifestyle.
- Achievement of financial security.
Owners need to plan 5-10 years prior to transferring to maximize the company’s value. Businesses tend to underestimate the time needed and complexity of issues involved. A competent team of advisers can assist owners and provide a support system for new entrepreneurs to grow the future business.
For more information, you can go to www.KansasCityFed.org
, Community Development-Resources and download “Will You Be Ready for the Finish?” or “Will Your Clients Be Ready for the Finish?”
Local resources include the Nebraska Family Business Center with NBDC at 866.264.3443. Legal planning and assistance is available through the Community Economic Development Clinic, Creighton University School of Law, 402.280.3068,