The Canadian Federation of Independent Business warns over $2 trillion in business assets could be at risk with nearly two-thirds of small business owners planning to leave their business in the next decade.
The warning come from a new report created by the CFIB.
The majority of owners are choosing to leave so they can retire at 78 per cent. Another 21 per cent of owners are choosing to leave because of burnout or stress, and another 20 percent are leaving their business behind because of high operating costs.
Although leaving is not the biggest concern that the CFIB point to in the report, but instead that only six per cent of business owners planning to leave had a succession plan for their business.
Certain obstacles can get in the way of an owner creating a succession plan, with nearly half not being able to find a buyer or suitable successor. Being too busy to plan and owners not knowing what to value their business at are the next most common barriers, at 37% each.
Brianna Solberg, CFIB’s Director for the Prairies and Northern Canada, says the report comes at a time when business exits have been outpaced new entries in Canada since early 2024.
“With a wave of owners preparing to exit, we can’t afford to lose viable businesses because of the difficulty in navigating ownership transitions or finding someone to take over the business. That’s a huge blow to the economy, and it puts jobs and local services at risk.”
The has prompted the CFIB to call on the governments to:
- Increase awareness about the opportunity of purchasing an existing business
- Raise awareness of Employee Ownership Trusts as a succession option
- Add a dedicated Business Succession Stream to entrepreneur immigration programs
- Create a business transition marketplace that matches exiting owners with vetted successors
- Modernize capital gains rules, including a lower 33% inclusion rate on the next $2 million of gains beyond the Lifetime Capital Gains Exemption
- Explore ways to help first-time business buyers access capital, similar to supports for first-time homebuyers
The CFIB also recommends that small business owners who don’t have succession plan should talked to a consultant who can help them develop a plan.
A link to the Passing the Torch: How Canada’s Small Business Owners Are Planning Their Exit and Why the Next Generation of Ownership Matters report can be found here.
