Transitioning businesses for success
The Writing on the Wall
According to the Canadian Federation of Independent Business, 70 percent of small and medium-sized business owners are interested in retiring. A CIBC World Market report stated that there are 1.9 trillion dollars worth of business assets looking to transition in Canada. Unless some kind of intervention occurs, rural communities will be hit particularly hard as businesses and farms are forced to divest for pennies on the dollar or shut down completely. The loss of these services will negatively impact members of these communities and their local economies, resulting in decreasing tax revenues and limiting municipal abilities to operate.
Communities understand that they need to retain these valuable assets to ensure their local businesses continue to operate instead of shutting down. Although the task seems daunting, municipalities can take succession challenges in their communities and turn them into opportunities for local economic revival and sustainability.
Over the last three years, we’ve worked with a number of communities to accomplish this through the SuccessionMatching Community Project (SMCP). We have developed three phases of programming that can be implemented in any municipality.
The SuccessionMatching Community Project
SMCP is a boots-on-the-ground approach to succession planning. The first phase of this project is to create partners in the community who share your objectives and have a network of business and farm owners. From there, community partners can become knowledgeable about the steps that business owners should take and the resources that are available to them locally, provincially, and federally, from both the private and public sectors.
The next phase makes sure you understand the concerns of business and farm owners in your community. Having worked with many entrepreneurs and farmers in this position, we have discovered that their top three concerns are: privacy, cost, and having access to the right people and information. Finding the balance between privacy, cost-efficiency, and well-rounded advice is imperative to getting good local participation from business and farm owners.
The last phase is where things start to get really exciting – transitioning to a new owner. While many business and farm owners imagine the next owner will be one of their children, an unprecedented number are looking to transition at the same time as fewer and fewer sons and daughters are interested in taking over the family business. Youth entrepreneurship and international investment have untapped potential to solve this issue. We have developed programming to address it, and municipal communities can do something similar by developing programs to attract and retain the youth already in their communities.
Business retention is a problem that many municipalities are either currently facing or will face in the near future, but it’s also an opportunity. Every community is unique, which is why it is important to bring together community stakeholders from the private, public, and not-for-profit sectors. Once a business community comes together, stakeholders develop an action plan and implementation strategy to actively engage and assist business owners who are looking to transition their businesses. It’s a model that can be used to turn your transitioning businesses from risks into assets, and to keep your municipality open for business.
If you’re an economic development professional interested in helping to transition local businesses, visit www.successionplancanada.com for more information and click on “Contact Us” to get in touch.
Jason Vinck is the Director of Communications and Learning at SuccessionMatching.com, a website for business buyers, sellers, and succession planning professionals.
