Most small and medium-sized business owners do not have a succession plan in place.
And many of those owners that do not have a continuity plan in place do not intend to one in place, according to research commissioned by Investwise Financial Planning.
The research found that 60pc of small or medium-sized enterprises in this country do not have a succession plan in place to ensure the smooth continuity of the business after retirement.
And 42pc of SME decision makers who have not planned for succession currently do not intend to put such a strategy in place.
Just 16pc said that they will develop a succession strategy, while 42pc said that they might.
Around three quarters of Irish-owned businesses in the private sector are family owned.
Managing director of Investwise Financial Planning David Quinn said a lack of effective succession planning is one of the main reasons why many family businesses fail to survive to the second generation. He said even fewer survive to the third generation and beyond.
Mr Quinn of said research indicates less than a third of family business transfer successfully from one generation to the next.
“Our research reveals a significant opportunity for SME/family businesses to secure their future by proactively planning for succession.
“SME owner/managers pour their heart and soul into their businesses; protecting a business legacy and creating a strong path to future success for the next generation are too important to leave on the long finger.”
He said owners need to think about how they can future-proof their business and ensure that “all the sacrifice and hard work is not wasted but securely invested in an operation fit for the future”.
Reasons for not having a succession plan include a lack of understanding or knowledge of what is required and not knowing where to start.
Other reasons include the fact that day-to-day business operations can be all-consuming, and the challenge of balancing family versus business interests. One third of respondents said succession was not a priority as it was in the future.