One in three owners of small and medium businesses in Croatia above the age of 55 mostly do not think who to leave their business to or what will happen with it after they retire, shows a survey on business transfers, presented earlier in the week.
This is the first survey of this kind, its author Mirela Alpeza, director of the Centre for Small and Medium Business Policies and Development, said while presenting the findings.
The survey covered 200 owners of small and medium businesses and its findings are mostly shocking, she said.
There are as many as 16,590 companies in Croatia whose owners are above 55 and those companies employ 179,000 people. Thirty-two percent of those business owners own 5,300 companies, employing 57,000 people and they are an especially risky group because they do not understand changes that will occur after they retire, she said.
"The relevance of the issue of business transfers is additionally emphasised by the large number of management transfers that are to happen in the next five years in companies founded in the 1990s," Alpeza said.
The survey shows that 47% of business owners are aged 55-60 and that 53% are aged 61 and above.
As many as 92% of business people in the age group 55 and above are owners and founders of their business, 5% bought their business, 2% inherited it, and one percent acquired it in some other way. As many as 88% of the surveyed business people have an ownership share and a management position in their company. Also, 97% of those business owners have children, 38% run family businesses whose management involves their child, spouse or someone else, and 62% of the surveyed companies are non-family businesses.
Asked about possible changes of ownership and managerial positions, as many as 24% of business owners said they were not considering them, 26% said they believed those changes would happen in five to ten years, and 23% said they would happen in the next three to five years.
Asked about the future of their business after they withdrew, two-thirds of the surveyed business people said their businesses would continue operating, 17% said they believed they would close down, and six percent said they believed they would be sold. Twelve percent said they did not think about this at all.
Sixty-one percent of the surveyed business people said they believed their business would be taken over by someone from their family, 19% said this would be done by one of their staff who was not a member of their family, and 12% said a new manager would be appointed.
Sixty-eight percent of the respondents said they already knew the person who would possibly replace them. Fifty-nine percent intensively discuss with their children the future of their business, while 18% do not have such discussions at all.
Alpeza said also problematic was business people's perception of the time needed to transfer the management of a company, with 22% of respondents believing that it took less than a year, 50% believing that it took from one to three years, 22% believing that it took four to five years and 6% being of the opinion that it took more than five years.
Based on the survey findings, Alpeza recommended launching campaigns to raise awareness among older owners of small and medium businesses of the complexity of business transfer processes and the importance of timely preparation.
In the EU 450,000 companies with two million employees every year undergo the process of business transfer. In 150,000 of those companies, that process is not approached appropriately, which puts at risk around 600,000 jobs.