Are you ready for the future?
Are you a boomer planning to sell your business in the next 5-10 years? If so, keep reading. Check out the following highlights from this alarming article from the Ottawa Citizen (posted on November 13th, 2012).
- A wave of retirements among business owners over the next few years could pose a significant risk for the Canadian economy as the country undergoes the biggest transfer of economic control in its history.
- Half of all small- and medium-sized businesses in Canada are set to retire over the next decade, including 310,000 that plan to transfer control of their companies within the next 5 years.
- An estimated $1.9 trillion in business assets are poised to change hands in 5 years — the biggest transfer of Canadian business control on record.
- Companies that will see a change ownership in the next 5 years currently employ close to 2 million people and account for at least 15% of GDP.
- Survey after survey has shown that business owners are ill-prepared for the inevitable ownership transition that is quickly approaching. Close to 60% of business owners aged 55 to 64 have yet to start discussing exit plans with their family or business partners.
- The key for business owners is to act quickly because a flood of businesses on the market will reduce prices. That will prompt company founders to either work longer with the vast majority eventually closing their doors and walking away.
(You can view the original article HERE.)
When I posted this article to my Facebook page recently, I invited some business colleagues of mine to weigh in on this all-important topic. I have reproduced the conversation thread here (with their permission of course).
Matthew Shipley: “In my opinion this article does a great job of outlining the issues that most business owners face, as opposed to listing product solutions ahead of uncovering client concerns. These issues make up most of my client’s discussions. It’s pretty bold to provide a solution before knowing what the problem is! I feel that lesson applies to almost all businesses, don’t you agree?”
Shannon Boschy: “I totally agree with Matthew Shipley. Many business owners are so focussed on running their business that these issues sit on the back-burner year after year… until it’s too late. The transition of a business is complicated. There are huge emotional issues at play on top of the legal and financial ones: Control, Compensation structures and Continuation of Vision are among them. Business owners are hugely passionate about their creations and they really need to engage the kinds of professionals who understand all the dynamics of these transitions. I’ve felt like a psychologist/therapist in many, many discussions around these issues.”
Eric Deschamps: “Couldn’t agree more gentlemen. Thanks for sharing. What’s the number one reason (in your opinion) that owners aren’t better prepared for these all-important issues?”
Dan Levesque: “In my experience it comes down to this. Business owners are so busy working IN the business they forget that they should also be working ON the business. Exit strategies are often not discussed until the issue is practically on the doorstep, and then of course your better options are behind you. It is our job gentlemen to educate the business owners and help them work ON the business plan and succession plan to make sure these businesses who have an important part in the corporate community are not ending up literally giving up their businesses away. Thanks Eric, great topic to discuss!”
Shannon Boschy: “That’s a complex question actually. I think if I were to fit the answer under one heading I might say “Fear of the Unknown.” We’re naturally afraid of uncertainty and we tend to avoid looking into a future we don’t understand in favour of what we do understand and can control. One way to overcome that kind of fear is to create clear and compelling goals on the other side of the event – in this case we’re talking about the sale of a business which is a process that can take years. If there is no plan on the other side and nothing to work towards, why change? The other major fear that people have, especially business owners who have invested part of their soul in their business, is the loss of identity. They confuse what they do with who they are… and if they sell their business they are left with some big and sometimes frightening questions.”
Are you ready for the future? Do you have a plan in place? If the statistics in the Citizen article referenced here are correct, the next few years will present a great opportunity for entrepreneurs. With a market flooded with businesses up on the block, it will be a buyers’ market. For owners trying to sell, the outlook is not very promising.
Talk to seasoned professionals (like the ones referenced here) who can help you craft and execute a plan that will significantly increase your chances of making a successful transition out of your business! And remember, a qualified business coach can be your best ally in preparing your business for the future! Ask us how we can help!
Thoughts? We would love to hear from you! What experience do you have with succession planning, and what tips might you offer others reading this thread? Have any questions? Ask away and we will do our best to answer.
Sincerely,
Eric Deschamps – Business Coach, Ottawa
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