Canada’s population is aging and Canadian entrepreneurs are no exception. In fact, close to 60% of Canada’s small and mid-sized business owners are aged 50 or older, nearly double the proportion of the overall workforce.
As a result, Canada is in the midst of a major shift in business ownership as the baby boomer generation retires.
Within the next five years, 41% of entrepreneurs in Canada expect to leave their existing business without acquiring another one, according to a 2017 BDC survey of 2,500 Canadian small and mid-sized business owners. This is up from one in three in the mid-2000s. Of the entrepreneurs who expect to leave without acquiring another business, 83% say they plan to retire.
“An increasing number of entrepreneurs are thinking about retiring and selling their businesses,” says Sylvie Ratté, Senior Economist at BDC. “With so many sellers on the market, the competition could be fierce, especially for those who haven’t taken the right steps to prepare the sale of their business.”
Entrepreneurs could be leaving money on the table
Much like a homeowner putting a house up for sale, any entrepreneur planning to sell a business—typically his or her biggest asset—wants to realize the highest possible return. And, as for a house, careful preparation is an important step that will precede the successful sale of a business.
Unfortunately, BDC’s study is showing that many entrepreneurs are not making the best moves to boost the price of their business before their exit.
Among the entrepreneurs looking to exit without acquiring another firm:
- 71% are reluctant to take risks to improve their business's performance.
- 52% have little interest in expanding their business.
“This cautious approach may drag down the market value of these businesses, and could even impact the entrepreneur’s retirement,” says Ms. Ratté.