According to a study by the Bielefeld Chamber of Industry and Commerce, the situation regarding company succession in East Westphalia is apparently less dramatic than in other parts of the republic. Only a quarter of all company owners over the age of 55 have not yet dealt with the issue. In contrast, according to the study, around two-thirds of all company owners over 55 have already dealt intensively with their company succession.
Does this make East Westphalia pleasantly different from many other regions in Germany? Elsewhere, business promoters, politicians, bankers and entrepreneurs face a largely unsolved problem. For parallel to the shortage of skilled workers, there is also the threat of a nationwide Lack of entrepreneurs. I therefore took a closer look at the figures.
A look at a study published at the same time by the Chambers of Industry and Commerce in North Rhine-Westphalia paints a different picture. According to this study, almost 50% of all company owners in NRW have not yet dealt with their succession. A look at the key results from the studies of various chambers of industry and commerce and chambers of crafts throughout Germany confirms this trend:
- 1/3 of all craftsmen in the district of the Osnabrück Chamber of Crafts are older than 55 and are facing a generational change in the next 10 years. This is about 3,000 businesses. (HWK Osnabrück, March 2017)
- Up to 20% of all craft businesses will close for lack of successors in North Saxony. (HWK Leipzig, March 2017)
- 69% of all entrepreneurs surveyed have not yet made any provisions. (IHK Regensburg, September 2016)
- 1,600 companies in Saarland face the question of succession by 2021. (Saarland Offensive, June 2016)
- 3,000 companies are looking for a new boss in the next five years. (IHK Upper Franconia, April 2016)
These figures make it clear that Germany’s regions are facing a profound generational change in the coming years. The cohorts with the highest birth rates in the Federal Republic of Germany will reach retirement age in the coming years. The entrepreneurs born in the fifties and sixties of the last century will have to deal with the settlement of their entrepreneurial legacy due to their age.
High proportion of family-internal company successions in East Westphalia
At the same time, not every entrepreneurial child wants to enter the family-internal succession. Thus, entrepreneurs are forced to look outside the family for potential succession candidates. In some sectors, we are already seeing a shortage of entrepreneurs in addition to the shortage of skilled workers: it is highly likely that there will be more business offers than business successors in the near future.
So what is the reason that entrepreneurs in the Bielefeld chamber district are apparently much better prepared than the rest of the country? The high proportion of business successions in the family could be one reason: around 70% of all businesses in East Westphalia are to remain in family hands after the handover. Nationwide, only between 35 and 50% of all companies succeed in this. The trend is continuing to decline. Only around 17% of all German family businesses remain in family hands for more than two generations.
Critical voices, on the other hand, would link the extremely good result in a national comparison to the overall low total number of 300 entrepreneurs surveyed.
According to Creditreform, there are currently around 66,000 companies in the chamber district of the Bielefeld Chamber of Industry and Commerce. Of these, around 7,500 are classified as classic SMEs. These employ 10 to 100 people and have a turnover of between 0.5 and 5 million euros. Slightly more than a third of all bosses are older than 57. However, the management staff in a total of 57% of all enterprises is already older than 50. This is quite close to the national average of 58%.
This leads to the conclusion: The number of business successions in East Westphalia will also increase significantly in the future.
Thus, the 3Ws of business succession are also particularly important for East Westphalia’s entrepreneurs: Whe should Wan Wen be handed over? This is especially true if the company wants to remain in family hands.
Successful company successions can be planned
For family entrepreneurs in particular, succession within the family is often an emotional challenge and a life decision. After all, parents and children meet at the same time in an entrepreneurial and family context. As a result, this form of generational change is characterised by a particularly large number of emotional hurdles. In order to recognise these hurdles at an early stage and avoid conflicts, good planning of the business succession pays off. Such planning also has a positive effect on the successful transfer of family assets to the next generation.
The 3Ws of business succession help with this. In the course of answering these essential questions, the following come into play in a Company succession in the family business more immediately:
- Should the company be continued in or outside the family?
- Will the company remain in family ownership and be managed by an outside director?
- When is a company sale advisable?
- What needs to be done in the context of preparing a business succession?
These and other questions are not easy to answer. For this reason, the preparation of company successions in East Westphalia is often accompanied by specialists. In a succession workshop, for example, the specialist answers the basic question of a succession solution within or outside the family. He then initiates the necessary steps.
Because it turns out that only well-prepared company successions will be successful in the long term.
Tips for further reading:
Free guide to business succession
Comment: Unresolved company successions endanger our prosperity
One third of all craft enterprises face business succession in Grafschaft Bentheim
KfW - Analysis: Company succession a burning issue in SMEs
The costs of a business succession or an M&A project
Free webinars on business succession
How do you find reputable business sale advisors?
In large parts of Germany, analogous to the shortage of skilled workers, there is also a major shortage of entrepreneurs. For example, according to a study by the Chambers of Industry and Commerce, almost 50% of all business owners over the age of 55 in NRW have not yet dealt with their succession. In East Westphalia, on the other hand, only a quarter of entrepreneurs have done so, according to a study by the Bielefeld Chamber of Industry and Commerce. The situation is similar in other regions. According to a regional study by the Regensburg Chamber of Industry and Commerce, 69% of all entrepreneurs surveyed have not yet made any provisions. One possible reason for the relatively relaxed succession situation in the chamber district of Bielefeld: the high proportion of family-internal company successions. According to this, about 70% of the companies in East Westphalia are to remain in family hands. In contrast, the national average is only between 35 and 50% of all companies.
The 3Ws are also particularly important for East Westphalia’s entrepreneurs: Whe should Wan Wen be handed over? After all, succession within the family is often an emotional challenge. This is because parents and children meet here in both an entrepreneurial and a family context. Therefore, thorough planning helps. In the process, further questions arise in family businesses:
- Should the company be continued in or outside the family?
- Will the company remain in family ownership and be managed by an outside director?
- When is a company sale advisable?
- What needs to be done in the context of preparing a business succession?
