A majority of B.C. small business owners are planning to exit their businesses sometime in the next ten years, but the Canadian Federation of Independent Business (CFIB) says that only four per cent of them have a succession plan.
Where will this business exit leave the province?
A new report from the CFIB reveals that business exits are actually outpacing new entries in B.C., and have been for the last five consecutive quarters.
CFIB says that B.C. will be facing a ‘succession tsunami’ over the next decade “as aging entrepreneurs prepare to retire.”
Ryan Milton, CFIB Director of Legislative Affairs for B.C., warns that those without a plan risk a delayed retirement or being forced to close their businesses altogether.
“With 98 per cent of B.C. businesses being small businesses, policymakers need to prepare for big changes to the provincial economy,” Milton says.
For almost half (48 per cent) of these small business owners, finding a buyer or a suitable successor is the biggest hurdle. An additional 38 per cent say they’re too busy, while valuing the business is the most common barrier for 35 per cent of respondents.
CFIB notes that B.C. owners are more concerned on average about supporting employees and community when they’re planning an exit.
A whopping 92 per cent of respondents say that protecting employees is important when selling (higher than the Canadian average at 85 per cent).
An additional 87 per cent of B.C. business owners are concerned about their businesses still supporting their local community. Three-quarters of owners say that keeping the business owned by a Canadian is important.
“By making it easier to buy and sell a business, governments can help entrepreneurs ensure their legacy continues supporting their local community,” Mitton said, adding, “Creating dedicated business marketplaces as Québec has done or raising awareness of Employee Ownership Trusts are just two of many actions the B.C. government can take.”
With the election just over 24 hours away at the time of this publication, the CFIB has a call-out for governments.
The CFIB is asking governments to increase awareness, especially among young entrepreneurs, about the advantages of purchasing an existing business.
It also wants governments to explore ways to help first-time business buyers access capital, like the support that exists for first-time homebuyers.
You can read the full report on the CFIB website.