by Stephen Dafoe
RBC’s Myron Kostick and Putnam & Lawson’s Gord Putnam presented the importance of succession planning to business owners during the Sept. 6 Chamber meeting. The two experts in succession planning outlined the facts and figures on an often overlooked aspect of business management.
Kostick, an account manager for RBC’s Commercial Financial Services, told local business owners that one in four Canadian business owners over the age of 50 plan to exit their business over the next five years due to what he called the “baby boomer impact.” While 25 per cent plan to leave their firms, Kostic said 77 per cent have put little to no effort towards putting a succession or end strategy plan in place.
“We strongly recommend that business owners have a business advisory team working with you through your entire process of your business career,” Kostick advised, noting such a team could consist of a lawyer, accountant, business valuator, commercial account manager and family members.
With many Canadian business owners looking to retire, there is a need to consider the existing business’ legacy. Kostick said transition options include selling a business, having family take it over, bringing in a third party partner, or simply winding it down.
Kostick said RBC is offering free advice on succession planning to its commercial clients over the next five years.
For Gord Putnam of Putnam and Lawson, succession planning is something he and partner Andrew Lawson have been working on for some time.
“We had to make a decision about what we were going to do,” Putnam said, adding that in the future they realized they would be in a situation where they would just retire and walk out the door. “We didn’t think that was fair for a lot of reasons – a legacy for us, and also we do provide a service for the community, and we wanted to see that be able to continue after.”
Putnam said he and Lawson began their succession planning by bringing some younger lawyers into the firm, something they have done three times in recent years, the newest being Putnam’s nephew, Max.
It’s come to the point where Putnam now talks to clients who are starting a business about planning to end their business. Although clients are often surprised, Putnam says retirement time comes faster than one thinks, and life can throw a business owner a number of curves, including sudden illness.
“The time you spend on that [succession] plan is going to be directly linked to the success you have and the success that’s going to happen down the road,” he said.