Time is rapidly catching up to more and more Canadians, and an aging population means a greater strain on the Canadian labour market, healthcare system, and company pension policies.
Succession planning has become critical for small-to-medium business owners in Canada because having a clearly defined and prepared exit strategy will allow business owners to seamlessly transfer into the next phase of their lives. Whether that is retirement, or to pursue other business opportunities, it is clear that succession planning will continue to play an important role in the strategy of small-to-medium-size business owners.
According to the Canadian Federation of Independent Business, over 97.8% of the total business establishments in Canada have less than 50 employees. Furthermore, within this sector of the economy over one-third of small-to-medium size business owners plan to exit ownership within the next five years, and over 90% of these owners have no formal succession plan.
Impact of the Stock Market
Given recent economic trends, it is understandable that Canadian investors and entrepreneurs may be averse to the risk and volatility in the stock market. For years many Canadians have used the stock market to earn a paycheck, grow their wealth, and provide for their future. However, persistent fear of government defaults in Europe, combined with political unrest overseas, and weak hiring reports around the world has led to volatile stock price swings that make most Canadians hesitant to invest in the market.
Given these market trends, more and more Canadians are once again employing their entrepreneurial spirit and investing in small-to-medium-sized companies that fill their appetite to earn a paycheck, grow their wealth, and provide for their future.
What’s Next?
The stabilization of the Canadian economy also means that there is a new crop of entrepreneurs looking to purchase an established business. Acquiring an existing business with steady revenue and cash flows allows entrepreneurs and business owners the opportunity to expand into new markets or diversify their product base.
This new crop of future business owners want to become masters of their financial destinies once again, and purchasing an established business with steady cash flow and sales revenue allows them to eliminate much of the risk that is present in other, less secure, investment opportunities. These new investors and entrepreneurs, combined with the many current business owners who are looking to expand into new markets or add new product lines, means that the pool of investors looking to make acquisitions in the SME market will continue to grow.
Despite the constant gloom about the state of the domestic and global economy in the news these days, the hardworking Canadian entrepreneurial spirit is still very much alive.