When business owners fail to create succession plans, that’s a major concern – not only for their individual businesses but also for Canada’s economy.
So much of our economy depends on the viability and growth of businesses across the country or, in other words, on business owners making sure they have succession plans in place, says Sean Foran, managing director of Business Transition Planning with CIBC Wealth Management. “So the question is why are business owners not dealing with this?”
One reason is business owners tend to be very hands-on, says Foran. “They tend to do everything themselves and they’re used to making all the important decisions.”
So it’s not that these clients don’t want to retire, he adds. The real issue is the idea of passing on their businesses, says Foran, because “the notion of letting someone else take over something so important and as deeply personal as the family business can be hard to accept.”
But without a well-crafted succession plan, “a business can easily fail in the transition to the next generation,” he adds. It’s important to also highlight “that having a business plan adds value to a company; if selling the business turns out to be the eventual outcome for the business owner, having a plan can absolutely increase the sale price,” says Foran.
The call to action for owners and their advisors, then, is that succession plans need to be crafted while owners are still active in the business. This will cut down on transition confusion, says Foran, and ensure that owners’ legacy wishes are respected, and “that their businesses continue to grow and prosper.”
Here’s a look at Canada’s business owner segment and why it matters.
Business owner landscape