Recession forces small biz owners to delay retirement
November 26, 2012 By Canadian Garden Centre & Nursery
Nov. 26, 2012, Toronto — The 2008-2009 recession prompted many baby boomer entrepreneurs to delay their retirement plans and stay in business longer than they had anticipated, according to survey data from the Canadian Federation of Independent Business (CFIB).
The results are presented in the new report Passing on the Business to the Next Generation.
“The recession clearly had an impact on succession planning,” said CFIB’s vice-president of research, Doug Bruce. “Instead of passing the business on to the next generation, some small businesses decided to hold onto their business until its value returned to pre-recession values.”
Almost one-quarter of business owners (23 per cent) said they have delayed the timing of their exit date between one and four years. Only five per cent said the downturn prompted them to accelerate their exit date.
While estimates vary, Canadians will see a massive transfer of small business assets in the next decade – possibly totaling more than $1 trillion.
The report found that almost half of small and mid-size enterprises (SMEs) currently have a succession plan in place. Out of these small business owners, one half will exit their businesses in the next five years.
“Small business is the backbone of the Canadian economy, and succession planning is critical to the long-term future of small business,” said Dan Kelly, president and CEO of the CFIB. “Governments have the ability to hurt or help entrepreneurs successfully pass on their businesses to the next generation. We are counting on the Harper government to live up to its 2008 election commitment to index the lifetime capital gains exemption (LCGE) to inflation.”
“Unlike those working for government, very few small business owners have a pension and instead rely on the value of their business to help fund their retirement,” said Kelly.
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