According to a recent survey by the Canadian Institute Of Chartered Business Valuators, half the businesses in Canada have no succession plan or exit strategy, and 70% of business owners will be at retirement age by 2020.
For more specifics on the Financial Post article that features this survey, click on this link … http://www.financialpost.com/Management+exodus+threatens+aging+boardrooms/4918926/story.html
Not having a succession plan is not necessarily new in the world of business. But what has been changing are the competition dynamics brought upon us by the last recession.
In the past, business owners were not overly concerned about finding a way out of their business at retirement age as the booming economy provided ample opportunity for continuation of the family business or sale to a the open market.
But since 2008, the economy has tightened up, capital for business financing is not flowing as freely, and competitors are taking more drastic actions to either retain market share or out right survive in the market.
As the article mentions, many business owners have moved from a position of just riding their cash cow into the sunset to now struggling to figure out what to do with an Albatross now hanging around their neck.
All of this speaks more than ever for the need of a plan and a longer time horizon for completing a succession or exit.
And none of this is to say that the sky is falling or that all hope is lost for small and medium sized business owners without a plan.
Far from it.
But they are going to have to start knuckling down and start spending some serious time and money building a plan that is going to take them out of the business and provide the retirement they are looking for.
Its hard to say when the days will return where you could get away without planning the end and still do ok financially.
Continuing to take that type of position may put all you’ve worked for in jeopardy, both in terms of your legacy and retirement comfort.