37% of Canadian small business owners have implemented a succession plan for their retirement, according to a study by BMO Financial Group.
The number of small business owners who have prepared a succession plan amounts to 37% this year, up 15% compared to 2010. However, 58% out of 500 persons interviewed by BMO Financial Group do not yet have a succession plan. Owners of companies with 10 or more employees are ahead of the others: half of them have a succession plan, compared to one third for owners of companies with less than 10 employees. The main reason given by the least foresighted is that they feel it is too soon to start thinking about it.
Another question surveyed: what future do owners envisage for their company after they leave? 36% have the intention of passing it on to a family member and 26% would prefer to sell it to an outside buyer.
So that all goes well…
BMO offers some advice so that succession proceeds well. First, plan ahead, because contrary to what business owners seem to expect, the solution will not fall out of the sky on D-Day. The best is to start thinking about it at least 10 years before the transition. Then, consider all the options: sale, passing on to a family member or partner, dissolution… Each of these solutions has its advantages and disadvantages. Finally, talk it over with a financial adviser, who can present solutions tailored to the owner and together with him implement a strategy that corresponds to his specific needs.