Recession forces small business owners to delay retirement plans
TORONTO - The 2008-2009 recession prompted many baby boomer entrepreneurs to delay their retirement plans and stay in business longer than they had anticipated. That's according to a new report, Passing on the Business to the Next Generation based on survey data from the Canadian Federation of Independent Business (CFIB).
"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 a quarter (23 per cent) of business owners 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 more than a trillion dollars.
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 CFIB President and CEO Dan Kelly. "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."