The importance of succession planning for small and mid-sized Alberta businesses gets lost in day-to-day concerns like cash flow, inventory and HR challenges, according to a survey by ATB Financial. But this can be dangerous, said Wellington Holbrook, ATB Financial's executive vice-president, business and agriculture.
"Owners who don't pay attention to succession planning run the risk of one day closing down their business when, if planned correctly, they could sell it," he said. "Thinking about the ultimate future of their company is not top of mind for many business owners in this province."
More than four in 10 (42 per cent) of Alberta small and mid-sized business (SMB) owners are 55 years of age and older but planning their retirement doesn't seem to be on their radar, found the Business Beat survey, which polled 303 SMB owners in Alberta.
Other key findings:
• 45 per cent of small and mid-sized business owners in the province have been in business over 20 years
• 30 per cent are self-described as in the “mature or winding down” stage
• One-third are concerned with succession planning.
Only seven per cent of Alberta SMBs have a formal written succession plan and almost six in 10 (58 per cent) have no succession plan at all. Valuing the business and finding a suitable buyer or successor were the top barriers.
"It can take years for a business owner to create and plan a successful transition of a business," said Holbrook. "Yet it is critical to properly value your business and maximize the return."
The survey also revealed most Alberta business owners are optimistic about their immediate future. Eighty-seven per cent of business owners in the province expect their company to be the same or better off six months from now.
Despite the optimism, almost one-half (49 per cent) of those surveyed place human resources and labour as the most difficult issue. Of those who put human resources as their most, or second most difficult issue, 86 per cent said finding and attracting skilled labour is the biggest challenge.
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