Small business owners delay retirement

Just under half the owners of Britain's small businesses (49 per cent) expect to be able to afford retirement at 65 according to the latest Office World Quarterly Small Business Survey.

Other findings in the survey are that education and healthcare firms are leading an improvement in small business performance while more red tape is the biggest concern over this month's entry of ten new countries to the European Union. Small business support is consolidating for the Tory Party under leader Michael Howard who is pledging to reduce EU red tape if elected.

Early retirement

Asked about their business exit plans only 21 per cent expect to achieve their dream of comfortable retirement under 60. Just eight per cent will afford the bills to retire under 55 while a mere two per cent will afford a life of relaxation before 50.

Amongst nearly 1,500 small business owners taking part in the survey some 70 per cent would choose to retire by 65, just 14 per cent would prefer to work on until 70 but only ten per cent would continue beyond their 70th year. Owners able to match their retirement date with acceptable income number 42 per cent, although nearly the same number (39 per cent) say they cannot afford to retire at their preferred date, irrespective of age.

Andy Etherington, chief executive officer (CEO) at Office World says owning a small firm is no guarantee of a comfortable pension. He said: "These figures show a high price for the independence of running your own business. Stock market and pension fund underperformance and a tough trading climate for small businesses generally, mean entrepreneurs need to work harder for longer to earn sufficient funds for retirement. Add the long hours, general stress levels and massive increases in bureaucracy and it's not hard to see why so few businesses echo the Chancellor's view of the economy."

Most owners (70 per cent) expect to run their present business until retirement. Only 14 per cent plan a change, with a third of these expecting to buy or start another business. Thirty two per cent of owners eventually want to sell to an external party while 15 per cent plan to sell or give it to family. 23 per cent - mostly the micro businesses - will simply close.

Regionally, owners in London (61 per cent) and Scotland (58 per cent) have the best chance of affording to retire when they choose. Less than half (48 per cent) expect to match retirement with resources in the West Midlands. Those in health and education fare best with nearly 70 per cent able to afford their chosen retirement date. In contrast, just 40 per cent of construction business owners can afford a chosen date according to the survey, commissioned by superstore retailer Office World, and carried out by the Small Business Research Centre at Kingston University.

Education and healthcare

Best performing small business sector over the last quarter was education and healthcare with turnover up for 45 per cent, profits up for 44 per cent and employment up for 22 per cent.

More generally, turnover, profit and employment all increased this quarter. A six per cent rise to 37 per cent of firms saw turnover increase, while profits have grown for 31 per cent, up four points on last time. Sixteen per cent of the sample added staff during the quarter, up two per cent on the previous survey.

Business optimism has improved with 45 per cent expecting turnover to rise in the next quarter, 40 per cent predicting a profits increase, which is 10 per cent higher than last time, and 17 per cent seeing their headcount rise in the coming months. Most optimistic are owners in construction, education and healthcare again and those in hospitality, hotels and restaurants. Optimism across the board is above average in the East of England, Greater London and Yorkshire and Humberside.

Optimism

On the economy as a whole the sample is more optimistic. However, only 14 per cent of small firms judge the economy to be 'better than stable' and this has nearly doubled since the last survey.

Andy Etherington said: "You have to be optimistic to run a small business and the survey does reflect positive progress in the last quarter, especially increased funding penetrating the education and healthcare sectors. Owners also have improving expectations for their own business in the future. However, only half the sample see the overall economy as stable with a third taking a more negative view and only one in seven feeling more positive."

Red tape from EU expansion

Around 40 per cent of small businesses expect to see more regulation resulting from the expansion of the European Union by a further ten countries (from May 1st 2004). Almost 20 per cent predict more competition but despite recent reports that more than 50,000 migrants could seek to work in the UK, almost all the respondents expect to be virtually unaffected in their own business performance. Asked about a range of potential concerns 94 per cent say there would be no effect on employment, 90 per cent say no effect on turnover and 86 per cent no effect on profit.

Support for Tories increases

Forty six per cent of small business owners would vote Tory in a General Election, extending support for Michael Howard and his team by a further point from Labour whose share is up from 13 to 16 per cent while Lib Dem support dropped from 14 to 13 per cent during the last quarter.