This is “a huge issue, not only for business owners themselves, but really for the economy as a whole,” says Sihota. Cunningham points out that B.C. will see trillions of dollars passing between owners and their chosen successors within the next 15 to 20 years.
As many business-owning baby boomers prepare to retire and pass their businesses to the next generation, they need a proper plan to ensure the business continues, providing parents with a retirement fund and children with an inheritance. Both experts agree the process can take up to 15 years, depending on the size of the business.
Sihota and Cunningham encourage small-business owners to begin planning well before actual retirement, because succession planning should not be executed in a climate of stress. Wrapping up the business is not just about paperwork, Sihota explains: “There’s a whole lot of emotions to this process.”
Succession planning can include sorting out family issues and long-term goals. Questions that need to be answered include whether a direct takeover of the business is appropriate or whether it might be more suitable to pass along other assets to the next generation.
The first question to pose is whether the next generation is even interested in the business. Often, children are more interested in carving their own career path.
Succession plans can accommodate varying levels of participation from the succeeding generation. One plan might encourage greater interest in the business; another could explore a shift in the company’s direction; or, alternatively, the plan could involve training a third-party employee for takeover. All of these take time to realize and execute.
In an economy driven by small business, let’s hope the transition is smooth, because, in this province, family business is everyone’s business.
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