New research from VistaPrint reveals nearly one in three (31 per cent) small business owners plan to retire within the next five years, yet just 16 per cent have a documented succession plan in place.

The gap is raising concerns about what happens next, with thousands of otherwise viable businesses at risk of shutting down simply because there’s no plan for who takes over.

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Marcus Marchant, CEO of VistaPrint ANZS, says the issue comes down to how closely many businesses are tied to their owners.

“With one in three small businesses getting close to retirement without a clear plan for what happens next, we are heading towards a succession cliff,” he said.

“In many cases, the business is still heavily tied to the owner, through their relationships, reputation and day-to-day involvement, which can make it much harder to sell, hand over or keep the business going when they step away.”

An emerging succession issue

The research shows the problem runs deeper than  a lack of paperwork. Almost half (45 per cent) of owners considering an exit have no succession or sale plan at all, while one in four (25 per cent) haven’t even thought about what will happen to their business when they leave.

There’s also a communication gap between how owners are feeling and what they are telling the world. One in five (19 per cent) of those planning to retire haven’t discussed their exit with anyone, not even family or staff. With so many businesses built on personal relationships rather than systems or brand assets, it’s a huge issue, making the transition to a new owner or leader increasingly difficult.

Businesses tied to owner’s reputation

More than seven in ten (71 per cent) small business owners say their business relies on personal reputation and word-of-mouth over formal branding or marketing. That figure jumps to 78 per cent among owners aged 50 and over.

The problem is when the owner steps away, that reputation doesn’t always follow.

“If a buyer or successor can’t find you, can’t see what you stand for and can’t evaluate what they’d be taking on, then they’ll move on,” Marchant said.

“Branding isn’t vanity for these businesses. It’s the difference between a business that can be handed over and one that closes when the founder walks away.”

What a successful handover looks like

Marchant says Melbourne-based Griff & Lee Constructions is one business that got it right.

Mark Griffiths, who took over the business with his brother from their father, says they soon realised reputation alone wasn’t enough to keep customers coming through the doors.

“We’d worked alongside Dad for years, so we knew the trade inside out. But when we stepped out on our own, we realised his reputation didn’t automatically transfer to us,” he said.

“We had to build our own identity from scratch: signage on the trucks, uniforms with a professional logo, and a website, so people could see we were a legitimate operation.”

Griffiths says the shift paid off, helping the business attract new customers beyond existing word-of-mouth networks.

“It’s made a real difference. We’re getting enquiries from people who found us online or saw our van on site,” Griffiths said.

Branding seen as a missed opportunity

More than eight in ten (84 per cent) business owners believe better branding would lift their business’s value or sale appeal, and 72 per cent of those considering an exit say they’d invest in branding if it improved the outcome.

Cost concerns and not knowing where to start are often the main barriers to raising brand visibility.

Marchant says the businesses that act early will have more options.

“The owners who act now, documenting how the business runs, strengthening how it presents itself, will have more choices and better outcomes than those who leave it until it’s too late,” he said.

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