UNL Survey: Rural residents say communities can help businesses transition to new owners

Posted Sept. 19, 2012

Every business owner in small-town Nebraska eventually will retire or sell the business. When that happens, most rural Nebraskans feel their community can play a role in facilitating business transition, according to results from the 2012 Nebraska Rural Poll.

“Business and Wealth Transfer in Nonmetropolitan Nebraska” is the title of the third report released from the 2012 poll. Results are online at ruralpoll.unl.edu. The Nebraska Rural Poll is an annual survey conducted by the Center for Applied Rural Innovation in partnership with the UNL Department of Agricultural Economics and the NU Rural Initiative.

Respondents were asked a series of questions about business transfers and exits, as well as expected transfer of their personal assets.

Many businesses are expected to make the transition in the coming decade. As many as one-quarter of all Nebraska small business owners are likely to exit their business in the next five years, and up to one-half in the next 10 years, the report says, citing a recent survey of small businesses.

Cheryl Burkhart-Kriesel, entrepreneur and business development specialist at the UNL Panhandle Research and Extension Center, said the survey data tell her that many rural residents believe that communities should help.

One of the survey’s questions asked rural Nebraskans whether they think communities should pursue a strategy when a small business owner is planning to exit the business by selling or retiring. Statewide, more than 40 percent think very appropriate to work with them. Add the respondents who checked somewhat appropriate, and the total is over 80 percent.

Communities can help in a number of ways: planning transition, providing technical assistance, or making local revolving funds available for loans to help new owners acquire businesses.

“So from my perspective rural communities are saying that we need to do something. It’s worth the community’s investment to do that,” Burkhart-Kriesel said.

“To some extent this gives communities a green light to really think strongly about how we can work with those businesses on Main Street and really be creative,” she said.

Burkhart-Kriesel said there are numerous ways to transfer a small business from one person to another, and there are also resources available to assist.

One resource is the Nebraska Business Development Center at the University of Nebraska Kearney, which says that there are eight or nine ways to sell a business, she noted. Not all of them would work as well for the smallest businesses. The NBDC can provide a lot of resources, she said, to business people who are going through the experience.

Some of the other survey findings contained in this report:

• Most rural Nebraskans expect there to be about the same number or fewer businesses in their local community five years from now.
• People living in or near small communities are more likely than persons living in or near large communities to say there will be fewer businesses in their local communities five years from now.
• Many rural Nebraskans say losing the business forever is the most likely outcome when a business owner leaves or retires in their community. That sentiment is more common in the smallest communities than the largest communities.
• Most rural Nebraskans are concerned that business closings in their area will affect their ability to get the things they need.
• Most rural Nebraskans are concerned that jobs in their area will disappear because of business exits.
• Persons with occupations in agriculture are more likely than persons with different occupations to agree that they are concerned that business closings in their area will affect their ability to get the things they need. “So they’re vested,” she said of people in the ag sector.
• Many rural Nebraskans have a will or estate plan, and persons with higher household incomes are more likely than persons with lower incomes to have them.
• Persons living in or near smaller communities and persons with occupations in agriculture are more likely than other community size or occupation groups to expect their estate to go to family heirs who will keep the estate in the local community. On this question, Burkhart-Kriesel said ag sector respondents were the largest group who expect their estate to go to family heirs. Sixty-two percent think their estates will go to family heirs who will keep it in the community, compared to 27 in production, transportation and warehousing who think so.