> >>> jthorn65 at sbcglobal.net 02/18/06 9:13 PM >>>
> Most small businesses fail when the owner dies because no one wants to carry on. Look at funeral homes
> for a good example of small businesses that tend to continue because the heirs want it to.
> John Thornton
> <<<<<>>>>>
>
> have seen various percentages - from likes of small business administration,
> census data, chamber of commerce - over the years, re. small business
> 'failure' within one year and five years, irrespective of whether high or low
> end figures are correct, don't most of go out of business during owner's
> lifetime... mh
I can see the reason for some confusion but what I intended to say was that most small business that fail when the owner dies do so, not for any issues concerning the estate tax, but because the heirs do not want to continue.
The point being the estate tax is not killing off a significant portion of small businesses that heirs wish to carry on.
It was in response to Jordan's writing this with regards to the estate tax:
" there are a large number of people whose small business is also the asset they die with. For many, that (the estate tax) ends the business"
I can't remember the numbers I read concerning this years ago but "many" seems like more than a stretch.
Several years ago when I looked at data for restaurants the failure rate was ~90% in the first 18 months for sole proprieterships. No estate tax issues to worry about here. IIRC the reason for their failure was considered to be "poor management". What I read suggested it was really poor access to capital but that probably suggests something about capital market inefficiencies that would rather not be acknowledged. I'm certain someone here could write more eloquently on this subject than I.
John Thornton