Two-thirds of small business owners plan exit within 10 years: Survey

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Canada’s small business owners are burnt out and being squeezed out.

A new report released this week by the Canadian Federation of Independent Business (CFIB) found that 63% of small business owners plan to exit their business within the next decade, putting more than $2 trillion in assets up for grabs.

But while retirement remained the top reason for exiting, one in five small business owners blamed burnout and stress for seeking an exit, while another one in five blamed high operating costs including taxes, labour and tariffs.

“I think business owners are being pushed towards exit,” said the federation’s senior research director Marvin Cruz in an interview with the Toronto Sun.

“You just have to sort of look out your window to see how high tariff costs have been to business owners, input costs, taxation, regulatory compliance and labour costs.”

Small businesses under fire in Canada

As the trade war unleashes extra pain and pressure for business owners, the CFIB has long warned that Canada is facing a looming entrepreneurial crisis.

In April, the CFIB warned that Canada is in the midst of an “entrepreneurial drought” as small business closures continue to outpace openings.

According to that report, business entry rates in Canada had fallen nearly 50% since the mid-1980s and to this day remain at historic lows.

Earlier this month, the federation reiterated its calls for government to do more to address ongoing affordability crunches with only 7% of Canadian small businesses planning to grow or diversify significantly over the next year. Taxes, political uncertainty and rising labour costs were cited as the top three pressure points.

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Few owners have exit plans

The report is based on surveys conducted between May 21 and June 11 that included 1,731 respondents and a margin of error of plus or minus 2.35%, 19 times out of 20.

Cruz said small business closures hit hardest in small, rural communities where business closures typically mean a permanent loss of jobs and services.

In this week’s report, 47% of those polled said finding a buyer is the biggest hurdle for business owners seeking an exit. Only 13% of owners said they expected to simply close their doors, while only 6% said they had a formal, written exit plan for their business. Roughly half said they have no exit plan at all.

Cruz said he can’t fault overworked business owners for putting off exit planning, but said a lack of planning can come at a cost.

“Planning does get postponed until it becomes urgent,” he said.

“That can reduce your options as well as the business value.”

Owners need help with succession plans: CFIB

The CFIB is urging the federal government to create a national succession marketplace designed to connect sellers with buyers and to modernize rules surrounding capital gains to make the process easier.

Ensuring that business owners are able to sell their operations instead of closing down, Cruz said, benefits everyone.

“Every business that successfully does change hands instead of closing … that’s going to be a win,” he said.

“That’s going to be a win for business owners, for future entrepreneurs, for the communities we serve and for Canada as a whole.”

bpassifiume@postmedia.com
X: @bryanpassifiume

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