Factors Influencing Business Succession Planning among SMEs in Tanzania

The study intended to investigate factors influencing business succession planning among Small and Medium Enterprises (SMEs). It assessed how demographic characteristics, business size, and family related factors influence business succession planning. The research methodology involved surveying 25 SMEs and among 104 interviewed owners/supervisors, only a sample of 88 was analyzed by Chi-square to establish the relationship between independent and dependent variables. The findings show that the higher the age of SMEs owners, the higher the possibility of preparing the business successors. Also, males are associated with more chance of being involved in business succession planning, the sons having a big chance of being the successors. Furthermore, increase in the level of education of SMEs owners has a positive influence in preparing the successors. Similarly, business size has a positive influence on business succession planning, the bigger business being given the first priority. In contrary, increase in involvement of family members in SMEs has no influence on business succession planning. Lastly, increase in communication among family members has a positive influence on business succession planning. The study concludes that SMEs owners don’t prepare the business successors while still energetic. It further concludes that gender has an effect on business succession planning and that the owners who have low level of education die with their businesses because they rarely prepare the successors. The study recommends that the owners of SMEs should prepare the right business successors in time to make their businesses remain sustainably. Key words: Business succession planning, demographic characteristics, SME