Canadian Business Owners Aren't Ready For Succession - Survey

Editorial Staff

4 October 2018

Many Canadian small business owners are near retirement but a large numbeer aren't ready to exit their business and are uncertain about what to do next, according to a new survey.

IPC Private Wealth of Investment Planning Counsel surveyed 300 respondents across Canada. The respondents had to be 18 years or older, self-employed full time, and small business owners with up to 50 employees.

The survey revealed that 42 per cent of Canadian small business owners are unsure about their future and their plans for retirement while more than a third do not plan to give up ownership until they are not well enough to manage their business.

It also found that some 42 per cent would rather sell their business; 31 per cent would prefer to pass it on to heirs or family members; and 27 per cent would like to shut their business down.

Those with more than $1 million in assets are the most likely to sell their business , while those with $100,000 to less than $250,000 in assets are most likely to pass it on to heirs .

Around 48 per cent have no plans to seek the help of a financial advisor on business succession planning. Only 36 per cent reported that their families were aware of their succession plan.

The study is an example of attention being given to inter-generational wealth and business control transfer as the Baby Boom generation retires. An expected $30 trillion of wealth is said to be shifting to the younger generation in the next few years.

"Small business owners need to have a conversation with their heirs early on to determine whether they share the same passion for the business and if they have the skill set or are willing to be trained to take over the business," says Paul Wylie, senior vice president of business development at IPC Private Wealth. "We suggest using a coach, someone removed from the family, to facilitate these conversations and stand as a family advisor, not just as a financial advisor."