Small Canadian businesses are not planning properly for the future, according to a BMO Financial Group study published Tuesday. The study found 85% of small business owners do not have a succession plan in place.
BMO said the reason most business owners gave for a lack of planning was that they thought it was too early to start thinking about it.
James Wong, vice-president of succession planning at BMO Harris Private Banking, believes it’s never too early to start thinking about succession, noting that one-half to two-thirds of small business owners are planning to retire in the next decade.
“Succession planning should be a priority for every business owner, as it can help them realize that maximum potential value of their business while mitigating risks associated with economic uncertainty or a sudden shift in management,” said Wong.
Another study prepared by the Canadian Financial Executives Research Foundation (CFERF), also released Tuesday, found that only 40% of Canadian companies have a clear ownership succession plan in place.
Although the results are somewhat more promising than the BMO study, the CFERF said they’re still a concern for a country that relies on small and medium-sized businesses to generate up to half of its GDP.
“The risks of companies not having succession plans in place are enormous, both for the economic and for the owners themselves,” said Michael Conway, CEO and national president of Financial Executives International Canada.
“In addition to putting the businesses at risk by alienating potential successors and buyers, owners may fail to realize the full value of their life’s work.”
Joel McKay
@jmckaybiv