One in three Australian small business owners plans to retire within five years, but just 16% have a documented succession plan.
Why it matters: For many Australian SME owners, the business is their retirement plan. Thirty-four per cent of Baby Boomer business owners plan to use the proceeds of a business sale as their primary retirement nest egg.
Australia has approximately 2.5 million actively trading businesses. A significant and growing proportion are owned by people approaching, or well past, traditional retirement age.
The numbers from VistaPrint’s new research, released today, put the scale of the problem into focus. Nearly one in three Australian small business owners plan to retire within the next five years. Of those, just 16 per cent have a documented succession plan. Close to half, 45 per cent, of all owners considering an exit have no succession or sale plan at all. One in four have never even considered what will happen to their business when they leave.
Four in ten owners have already experienced a sudden, unplanned departure from a previous business, through health crises, financial pressure, burnout or market shifts. Yet one in five of those planning to retire have not discussed their exit with anyone, not family, not staff, not an adviser.
Research from MYOB’s Bi-Annual Business Monitor found that just 24 per cent of small and mid-sized business owners have succession plans in place for their exit, with 48 per cent of Baby Boomer business owners planning to exit within the next one to five years.
The backdrop makes the planning gap harder to ignore. According to ASIC data, more than 11,000 companies entered external administration in the 2023 to 2024 financial year, a 39 per cent increase from the previous year. Businesses closing without a plan are adding to that count, not because they failed commercially, but because no one was ready to take over.
“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,” said Marcus Marchant, CEO of VistaPrint ANZS. “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.”
Built on the founder, not the business
The research points to a structural vulnerability that runs through much of Australia’s small business sector. More than seven in ten Australian business owners, 71 per cent, say their business relies more on personal reputation and word-of-mouth than on formal branding or marketing. Among owners aged 50 and over, that figure rises to 78 per cent.
That model works, until the founder walks out the door. Nearly one in five owners nearing retirement have no professional logo, no website, no social media presence and no marketing programme. Over two-thirds, 67 per cent, of those approaching retirement lack consistent branding across signage, vehicles, uniforms or packaging.
“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.”
Industry research suggests fewer than 30 per cent of family businesses successfully transition to the second generation. By the third generation, that number falls below 15 per cent. For many Australian SMEs without family successors, the challenge is finding any buyer at all, and a business that exists only in the founder’s head and contacts list is a difficult proposition to sell.
What a real handover looks like
Mark Griffiths and his brother Lee took over Melbourne-based Griff and Lee Construction from their father in 2025. They had years of experience in the trade, but quickly learned that their father’s reputation did not automatically follow them.
“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. 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 said.
The investment paid off. “We’re getting enquiries from people who found us online or saw our van on site. Dad mostly built his business on word of mouth and a phone number on the fridge, and that still works. But if you want to grow beyond the people who already know you, you need a new way for them to find you,” he said.
The research reflects a broader willingness among owners to act, if they understand what is at stake. More than eight in ten owners, 84 per cent, believe branding would lift their business’s value or sales appeal. Among those actively considering an exit, 72 per cent say they would invest in branding if it improved their sale outcome. The barrier, the research finds, is not willingness, but cost concerns and not knowing where to start.
Where to start
Business succession planning should ideally begin at least three to five years before any anticipated transition, according to succession planning advisers, who note that the preparation required to make a business genuinely transferable, from systematising operations to reducing key-person dependencies, takes time to implement and demonstrate results.
For owners who have not started, the priority is straightforward: document how the business runs, identify who could take it over, and begin building a presence that exists independently of the founder.
Chartered Accountants can assist with tax efficiency, staff retention, investment planning and continuity strategies, according to Chartered Accountants ANZ, which noted that many owners are surprised by the range of options available to them once they begin the process.
“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,” Marchant said.
For the tens of thousands of Australian small business owners heading towards retirement without a plan, the window to act is narrowing, but it has not yet closed.
For more on the broader succession challenge facing Australian SMEs, read this feature from Dynamic Business.
