What we can expect from the next decade of small business succession and what to do about it?

A new report on the impending tsunami of small business successions in Canada was released earlier this month by the Canadian Federation of Independent Business. This is exciting news since as recently as two years ago, the CFIB had little to no available data on baby boomer business owners and how important the successful transfer of their businesses will be to the Canadian economy.

Although the pandemic served to speed up some business owner’s exit timelines, we have known about the greying of our Canadian workforce for a long time. Now that the youngest baby boomers (currently around 56) will be reaching retirement age within the next ten years, we’re going to start seeing and feeling the impact of their exit.

Some notable statistics from the report are:

• 76% of Canada’s business owners plan to exit their business within the next decade – meaning that over $2 trillion worth of business assets could change hands during this period.
• Only one in 10 business owners (9%) have a formal business succession plan in place to ensure a smooth transition.
• 39% of owners have changed their business exit date because of the COVID-19 pandemic – with about 17% accelerating their timeline, and 22% delaying it.

If you are a business owner or you know someone who is, we highly recommend you take some time to read the linked CFIB report. It is never too early to start succession planning, but it is also never too late. The following are some tips for getting started on your succession plan.

• It’s hard to create a plan if we aren’t sure what we want the outcome of said plan to be. Ask yourself what you want your life after business to look like. What will bring you joy in the next act of your life and when do you want it to start?

• Talk to any potential successors in your life and ask them what they want. Are they interested in taking over the business or will you potentially need to plan to sell to an outside party? Too often, business owner parents assume their children will want to inherit their business only to find out too late that isn’t the case. Avoid this kind of surprise by having conversations with the younger generation early and often.

• Look into booking a meeting with a Certified Exit Planning Advisor. Although there are still relatively few advisors in Canada with the CEPA designation, they do exist, and they want to help you successfully exit your business. To learn more about the exit planning services Intent Planning offers, click here.