Canadian entrepreneurs seem to want to prepare for everything except their own succession.
A BMO Bank of Montreal survey found that Canadian small business owners were more likely to have contingency plans for certain circumstances like an outbreak of H1N1 or environmental disasters versus having a succession plan in place.
About 85% of small business owners still did not have a succession plan, a proportion virtually unchanged from results in a 2008 survey. Meanwhile, 26% have developed health-related contingency plans following the H1N1 virus scare, a 10% increase in two years.
Close to half (47%) thought it was too early to start thinking about succession, while 20% said uncertainty about future business conditions prevented them from creating a plan.
This is despite the fact that half to two-thirds of small business owners are approaching retirement or are likely to think of exiting their business over the next decade.
Many advisers note it is never too early to think about succession. Many causes of succession can be unexpected, such as a sudden change in health or a rapidly developing financial challenge that makes it difficult to sell or transfer ownership when desired.
James Wong, vice-president of succession planning for BMO Harris Private Banking noted, “It’s important they make the time to work with their financial adviser to get their succession house in order.”
A BC Stats report in July noted the leading edge of British Columbia’s baby boom generation is set to turn 65 in 2011. While many baby boomers have already retired, the rate of retirement is likely to escalate in the coming years, having serious implications for the province’s labour force.