The majority of owners are very ill-prepared to pass the torch. Only one in ten have a formal succession plan in place, as companies worth a total of $2 trillion are preparing to change hands in the country.
Retirement is the main reason cited by business leaders for selling their company.
But many have also suffered during the pandemic and wish to escape the stress and offload their responsibilities.
The COVID effect
“Customers are becoming more and more unreasonable. With the pressure of the past two years, supply chain disruptions, customers and labor issues, I am completely exhausted,” a retail business owner said in a report released yesterday. by the Canadian Federation of Independent Business (CFIB).
“The pressure of staying afloat during the pandemic and the stress of coping with a heavy workload, all with less staff because COVID has ‘burned out’ those who were important, makes me think it’s time to leave,” says a restaurant owner.
Unprepared
Three out of four SME heads plan to pass the torch within 10 years. The problem is that only one in ten owners in Canada have a formal written succession plan. And among those who will retire within 12 months, only 16% have taken this step.
A situation that might prove costly and stressful for many, notes Jasmin Guénette, who is vice-president of national affairs at the CFIB.
“Few entrepreneurs contribute to RRSPs or take advantage of pension funds like a government employee. They finance their retirement by selling the business, explains Mr. Guénette. Throughout his life, an entrepreneur invests in his business, mortgages his house and finds himself in the line of fire. When he sells, that’s how he pays for his old age. »
Who will take over?
SME owners struggle to find a suitable successor. Many also struggle to properly assess the value of their business, notes the CFIB, whose role is to help them.
“A $2 trillion market is at stake. It’s a challenge, but also a great opportunity. We are passing the torch to a new generation of entrepreneurs. But too many owners are ill-prepared. The challenge is there,” concludes Jasmin Guénette.
