“A new report commissioned by insurer Zurich Insurance and written by the Economist Intelligence Unit, Derailing the future of economic growth: Demographic risks and financing pressures facing the UK SME economy, finds that the emerging “capital-light” generation of small business owners and entrepreneurs, along with a lack of succession planning from current owners, presents a significant risk to small business formation and the long-term growth and competitiveness of the broader UK economy. Nearly two-thirds of small business owners questioned by the report were found to be over 50, more than one in five are aged 61-70 and just 11 per cent are aged 40 or younger. Of those aged over 60 years old, 64 per cent said that they do not have a clear succession plan for transferring ownership and control of the business, meaning that UK SMEs may be significantly under-prepared for the retirement of their owners.

Furthermore, over half (56 per cent) of respondents acknowledged that SME owners wait too long before thinking about succession planning – a situation compounded by poor pension provision. With relatively low annuity rates and a rising state pension age many small businesses owners cannot afford to retire and in many cases feel they are better off carrying on. Coupled with later retirement, the research also reveals an emerging generation of potential “capital-lite” entrepreneurs and small business owners who may struggle to start or acquire and invest in a small business. Twenty-nine per cent of current small business owners are worried there will be a limited number of buyers for their business, while 18% are concerned that the next generation has insufficient available capital.”

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