Exodus of entrepreneurial skills from UK business

More than one quarter of the UK's SME owner-managers might sell their business in the next few years. Research undertaken for the Tenon Forum, shows a worrying trend that could leave Britain gasping for entrepreneurial skills and venture capital in the years ahead.

The research showed that 66 per cent of those who are thinking about selling have no plan to reinvest the capital they earn from the sale into another business and only five per cent are considering re-investing the majority of the capital. Capital gained from sale is often used as venture capital to help companies with high growth potential move on to the next stage of their growth.

Leaving business

The research claims that it is no surprise that some of Britain's hardest working and most experienced business leaders are hoping to drop down a gear in the near future, but what is worrying, however, is how many wish to opt out of business altogether. Fifty per cent of the UK's owner-managers stated that once they sell their organisation they have no plan to stay actively involved in business.

The bi-annual research questioned managing directors, financial directors and senior directors of 500 small and medium-sized businesses for analysis by the Tenon Forum, an independent think-tank of entrepreneurs.

The research follows a trend from previous research undertaken six months ago which showed that a similar proportion was hoping to sell within the next few years. The sector with owner-managers most keen to depart still remains retail, leisure and utilities.

There were huge disparities between different sectors especially with regards to the owner-managers' intentions post-sale. Of the manufacturing industry, 54 per cent were keen to re-invest the money earned from their sale, while a mere 12 per cent of the construction industry would do the same. As to staying involved in business, manufacturers were again the most intent to remain in business with three quarters saying they would not leave the scene completely, while only 21 per cent of leaders in agriculture, mining and fishing could say the same.

Strong-willed

Harry Dhand, Director of Corporate Finance at Tenon, said: "The frenzied lifestyle of the UK's owner-manager is one that only the strong-willed can handle for a concerted period of time. The stress and strain of business owner-management can take its toll and it's common practice to see owner-managers thinking of selling after 10 years of hard work building their business.

"It is worrying however to see so many thinking about leaving the fold altogether. No economy would look healthy if up to a quarter of its businesses decided to pack up."

"It may be more of a general aspiration though, rather than a concrete reality for many of these owners. Some of these business managers may be shocked to discover how much work has to go into selling a business successfully.

"A thorough exit strategy is required if you want to maximize the value of your business and these can take up to three years to create and execute successfully. Bold departures from business are rarely a knee-jerk reaction to a few stressful days in the office."