As Canada greys, the business landscape is on the cusp of a tectonic shift – and it appears retiring entrepreneurs are going to get rattled.
Nearly half of all entrepreneurs say they’re planning to step away from their business over the next five years – mostly to retire. Many are not prepared.
“When you’re getting ready to sell your business, you need to continue investing in your business, boosting profits, pursuing growth and sharpening your competitive advantage,” said Steve Harvey, CEO of Business Finders Canada.
Harvey says the trend is Canada-wide.
A recent study by the Business Development Bank of Canada points to a massive turnover in the ownership of small businesses across the country over the next five years.
Four out of 10 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.
Almost 60 per cent of those who own small and mid-sized businesses are 50 or older.
Harvey says a professional business broker can make a big difference in whether a seller will succeed.
“We’ve seen more and more people turning to a business broker for expert advice on all kinds of issues, including properly valuing their business and getting a business ready to go on the market,” he says.
“Doing it alone doesn’t make sense.”
Those who don’t have a clear exit strategy, don’t properly prepare their financials and don’t continue to build momentum will have a hard time selling – if they’re able to sell at all.
“These retiring owners are often relying on the sale of their business to fund a significant amount of their retirement,” he says. “So not properly preparing can have disastrous consequences.”