Thinking about retiring early because of the pandemic? You’re not alone. Far from it, in fact.
The latest Business Owners’ Outlook survey by Wilmington Trust and M&T Bank found the number of owners of larger businesses planning to retire sooner than expected jumped by 110% since last August — while the number of owners of smaller companies planning to retire doubled.
Business owners said their confidence in passing along their business to a successor is eroding. In March 2020 — at the start of the pandemic —half of those surveyed were very confident that their personal and business assets would be well managed if they were to die or become unable to manage them. In the latest survey, only 34% said the same.
Stuart Smith III, national director of business value strategies for Wilmington Trust and M&T Bank Emerald Advisory Services, said that is cause for concern — and should be a reason for all business owners to rethink their future.
“We highly recommend owners take this time to revisit their long-term business and personal planning,” he said. “To upgrade their technology, they may need to seek outside investment in the most cost-effective way possible, which will impact their valuation.”
Valuation is just one issue, Smith said.
The demands of the pandemic have even the hardest-working entrepreneurs thinking about calling it quits sooner rather than later.
That, too, needs to be planned, Smith said.
“If they really are experiencing burnout and want to retire or sell sooner, they will need a well-planned transition,” he said. “Beware of the quick-and-dirty exit plan, because it’s usually both.”
Wilmington Trust and M&T Bank officials said the latest Business Owners’ Outlook surveyed 1,007 business owners nationally between Jan. 25-Feb. 10, comparing large and small businesses, while also focusing on entrepreneurs of color to examine their perspectives and experiences.
Here are other key findings of the report, which was released Monday:
- The number of business owners pessimistic about the future of U.S. economy has doubled since March 2020, with only 24% expressing optimism;
- Roughly half of owners expect lower or flat revenue in 2021 compared with their pre-pandemic sales;
- One-third of business owners had to increase investments in technology to meet new customer needs; and,
- Entrepreneurs of color are 43% more likely to experience problems when applying for a federal Paycheck Protection Program loan.
The webinar and full report can be viewed here.