Many small businesses are closing down unnecessarily because they do not have a proper plan on transferring ownership, the Association of Chartered Certified Accountants (ACCA) has claimed.
In response to the Small Business Service’s consultation of business transfers, ACCA said that the government does not provide enough help to firms in succession planning.
The accountancy body said that this lack of planning means that relatively few businesses are passed down through the generations.
ACCA said that the government was to blame by applying a “disproportionate” amount of resources on starting up at the expense of planning for the future.
Recent research has backed up ACCA’s criticism, with many entrepreneurs admitting they did not know how and when they would give up their business.
Robin Jarvis, head of small business at ACCA, said that owner-managers often delay succession planning until their later years.
“This usually leaves insufficient time to develop an effective plan, which can take several years.
“Business transfers – which include management buy-outs, family successions and sales to independent buyers – have proven to be considerably more effective than startups at generating employment and generally have a better survival rate.
“The government should look to raise awareness amongst the business community of the help which is currently available to business owners and their potential successors,” he said.
