Ringing the Alarm Bells on Succession Planning
According to a report released by BDC, The Coming Wave of Business Transitions in Canada:
We want to change these statistics and provide solutions to our members.
In July 2018, the St. John's Board of Trade struck a Succession Planning Task Force with the goal of raising awareness about the importance of succession planning to the business community and to share resources and expertise with their membership.
“What is evident in the research is that the large majority of business owners do not have a succession plan in place.” It is our goal to provide solutions for our members states Nancy Healey, CEO of the St. John's Board of Trade.
The Board did research and explored solutions to help members with succession planning. The first initiative will be a seminar for members to connect with succession planning resources. The Board is holding the event on Tuesday, March 12th at the Signal Hill Campus. The event features local speakers in legal, finance and HR as well as a seller and a buyer sharing lessons learned.
Newfoundland and Labrador is experiencing aging demographics and will be faced with increased retirements in the coming years. The Board is raising awareness about the importance of early succession planning in an effort to ensure investments and jobs remain in St. John's.
The Board believes that there will be a significant opportunity for new entrepreneurs and graduates in the greater St. John's region to take over or purchase these assets from retiring business owners.
"We are encouraging business owners to speak to their financial planners, lawyers, accountants and HR professionals to seek advice and support on succession planning." added Chair of the Task Force, Dorothy Keating.
- Nearly 40% of business owners who expect to sell to outside buyers within the next five years appear to have done little or nothing to spruce up their financial reporting. Most have also not taken action to maximize cash flow in anticipation of a sale. These omissions do not augur well for the future value of their enterprises.
- Close to 60% of Canada’s small and mid-sized business owners are aged 50 or older, nearly double the proportion of the overall workforce.
- Four out of ten entrepreneurs in Canada are likely to leave their businesses within the next five years, up from one in three in the mid-2000s. The main reason they give for moving on is retirement.
- Over half of these entrepreneurs intend to sell or transfer their business to someone outside their family. A quarter of them see a family succession in the cards, while just over one in five expects to wind down the business and sell its assets.
- As with a homeowner putting a house up for sale, any entrepreneur planning to sell a business, typically his or her biggest asset, wants to realize the highest possible return. However, this study shows that many business owners are not making the best moves to ensure that outcome.
A listing of member resources such as BDC's "What do buyers look for when purchasing a business", and CBDC's "Welcome to the Business Atlantic Website" will soon be available on stjohnsbot.ca
For more information contact the St. John's Board of Trade at 726-2961 or visit stjohnsbot.ca.