EDITOR’S NOTE: This post comes from associate partner Myriane Ouellette.

Some experts say, that in order to get the maximum value out of your business, the optimum timetable for succession planning is 10 years ahead. Being a complex journey that often takes 1-3 years, owners should seriously consider bringing in professional help in the succession planning process. Undoubtedly, this is a project that often gets left on the backburner. Canada’s population is aging, especially in the Atlantic Provinces and the retirement of baby boomers is creating a high demand for successors and a saturated market for business sales. Finding a buyer will become increasingly difficult.

Unfortunately, when business owners are ready to start talking about retirement, transition processes are rushed which causes friction between successors and ultimately, gives way to profit loss and growth stagnation. While tax and financial issues are important when creating an exit strategy, owners often dismiss “soft issues” like long-term goals (including personal and family), understanding stakeholder’s vision for the company and actual employee anticipated role position. A good succession plan with a holistic approach gives the business an opportunity to have financial stability and viability that allows the business to grow, increasing the valuation. It reduces potential tax liabilities of transferring the ownership and sets goals and timelines so that the transition is well executed. This process provides stability and confidence to employees and gives the owner the chance to plan his/her personal finances along with the business finances long-term.

According to a study by the Canadian Federation of Independent Business, by 2016, 66% of SME’s said they planned to exit their business. In the next decade, with the increasing retirement of baby boomers, only business owners who have planned well will have a successful exit.

For more information on creating a succession plan for your business, contact me at m.ouellette@nufocusgroup.com.