Raising awareness of business exit strategies.
The report, Rooted and Resilient: The Case for Employee Ownership in the Welsh Private Sector, was commissioned by Social Business Wales in partnership with the Welsh Government in response to anecdotal evidence suggesting that Welsh SMEs are not actively planning their succession.
Research agency Wavehill carried out a survey of more than 300 businesses in Wales to see how ready they are for business transfer and how they expect to approach it.
The research showed that awareness of the need to plan for the future ownership of businesses is low, with many business-owners unaware of the issues involved in planning for succession or the dangers of not starting the process early enough.
The report calls for "serious consideration" of employee ownership as a viable approach for owners looking to plan their exit strategy.
It says a gradual management transfer process to employee ownership can ensure relations with employees, customers, suppliers and the local community are sustained once the founder has exited entirely.
One SME that has begun the process is Tregroes Waffles, a family-run bakery based in Llandysul, Ceredigion. Owner Kees Huysmans began to explore employee ownership more than five years ago, and last year sold 10% of his shares into an employee benefit trust, using company profits to pay for them.
He will sell more each year, provided the company is able to pay for them.
The agreement with the workforce also leaves an option open for five years for his children to come into the company and run it if they choose.
Derek Walker, chief executive of the Wales Co-operative Centre, said: "Employee ownership offers a succession approach that is fair to everyone. Business-owners can leave their business in the knowledge that they have got a fair price for it and they have also ensured that the future of their employees has been safeguarded. Employees get to take control of their own destiny and continuity of supply is assured for suppliers and customers."
He added: "Evidence shows that employee-owned businesses are resilient and are more likely to grow in tougher economic times. When employees retain ownership of a business, it is much harder for that business to then be sold to external competitors, allowing it to continue to grow whilst staying firmly rooted in the community it was started in."
The report concludes that recently introduced tax exemptions and the focus on business growth in Wales supports approaches for developing employee ownership as an integral part of a wider business succession offer in Wales.
Economy Secretary Ken Skates said: "This report helps to identify and raise awareness of the issues that face businesses in Wales in planning their future. Evidence shows that employee-owned businesses are resilient and more likely to grow in tougher economic times.
"As Wales has a high proportion of small and medium-sized businesses, it is important, through Business Wales and through Social Business Wales, that we are able to provide appropriate support to businesses so that they can continue to grow whilst staying firmly rooted in the community."
According to the Employee Ownership Association (EOA), employeeowned businesses contribute PS30bn GDP to the UK economy annually.
<B Kees Huysmans, centre, owner of Tregroes Waffles, with Paul Cantrill and Sarah Owens, succession planning experts at Social Business Wales Roger Donovan