Over $2 trillion in business assets are at stake as majority of small business owners plan to exit their business over the next decade
by Morinville Online Staff
With 76 per cent of small business owners planning to retire over the next decade, more than $2 trillion in business assets could change hands during that time, a new Canadian Federation of Independent Business (CFIB) report shows.
That report indicates that of those exiting their businesses 75 per cent plan to retire, 22 per cent feel burned out, and 21 per cent want to step back from their responsibilities as owners. But of the number of Canadian business owners planning to leave their businesses, only 9 per cent have a formal business succession plan in place.
“It’s essential for business owners to have a well-planned exit strategy. With over $2 trillion set to be in play in the next 10 years and only a fraction of business owners having a formal succession plan, the risks of improper planning can be big,” said CFIB Senior Vice-President of National Affairs Corinne Pohlmann. “Planning for business succession is a key factor in ensuring that Canada continues to have a healthy small business community.”
But finding a suitable buyer or successor is the most common issue for 54 per cent of small business owners looking to exit their businesses. Almost half (43%) struggle to measure the value of their businesses and 39 per cent feel their business is too reliant on them for day-to-day operations.
The impacts of the pandemic have altered exit plans. The report found one in four owners changed their plans, with 17 per cent speeding up the exit timeline and 22 per cent delaying that exit by a year or more, due to debt incurred during the pandemic.
“Not having a formalized succession plan could result in lost jobs, bankruptcies or loss of stability for the business,” said CFIB Research Analyst at Laure-Anna Bomal, and one of the authors of the report. “A majority of business owners rely on the sale of their business to fund their retirement. If they can’t sell their business, they’d have to delay their retirement. That adds another stress to the owner, their family and employees.”
CFIB has launched a suite of resources to help business owners plan their exits and find a buyer at Succession Start.
