Canadian small businesses are facing challenges around succession plans, according to a new survey.
As a wave of small business owners prepare for retirement, findings from a Scotiabank survey released Wednesday indicate that around 31 per cent of small business owners in Canada are planning to sell their business by 2030. The survey found that around 65 per cent of owners have a succession plan and 43 per cent of those planning to sell in six or more years said they do not have a plan in place.
Pouya Zangeneh, senior vice president of small business at Scotiabank, noted in the report that not all small businesses are ready to make an ownership transition.
“Many are struggling with succession planning and lagging in their digital transformation efforts, both of which are putting a successful transition of ownership at risk,” he said in the report.
Forty-five per cent of business owners indicated in the survey that modernizing digital capabilities could be an important way to boost the value of a business ahead of a possible sale. However, 46 per cent said they do not currently have a plan for a digital transformation.
“This lag not only makes it harder to address immediate challenges such as rising costs and consumers’ increasing digital expectations but also jeopardizes the long-term health and viability of the businesses, thereby reducing their appeal to potential buyers,” Zangeneh said in the report.
The survey also found that among business owners that have made digital upgrades, 33 per cent said it resulted in higher revenues, while 37 per cent said it helped them reach more customers.
“The landscape of Canadian business is transforming,” Zangeneh said in a Wednesday release on the report’s findings.
“With a significant portion of small business owners nearing retirement, and digitally savvy younger entrepreneurs stepping up, the need for robust digital strategies and effective succession planning is escalating.”
Methodology:
Scotiabank’s Small Business Path to Impact Survey was conducted by Maru Public Opinion on behalf of Scotiabank between July 12 and July 22. A total of 663 financial decision makers at Canadian businesses participated, with revenues spanning $50,000 and $5 million.