TORONTO, ONTARIO--(Marketwire - Oct. 13, 2012) - According to a new BMO study, almost six-in-ten (59 per cent) of Canadian small business owners report that their business has increased in value over the past five years, with an average rise of 39 per cent.
The study also revealed that when entrepreneurs were asked what they value most about their business, the family needs ranked near the top of the list. Top aspects valued about their company include:
- The sense of challenge and accomplishment it provides (24 per cent)
- The income it generates and the legacy it creates for the family (23 per cent)
- The career independence it provides (21 per cent)
"Canadian businesses are continually increasing in value: not only in an everyday, tangible sense, but in what the business brings to the entire family," said Steve Murphy, Senior Vice President, Commercial Banking, BMO Bank of Montreal. "With many Canadian business owners on the cusp of retirement and their businesses thriving, creating a succession plan should be a priority to ensure their hard-earned success continues in the way they envision it."
While awareness is increasing around the importance of having a succession plan, a BMO study conducted earlier this year found that more than half of Canada's small business owners (58 per cent) still do not have a plan in place.
"Just like creating a business plan or buying insurance, implementing a succession plan well in advance of your retirement can lead to a smooth transition process, help realize the maximum value of a business and mitigate against risks associated with economic uncertainty or a sudden shift in management," said Ian Niven, Vice President and Regional Director of Wealth Services, BMO Harris Private Banking. "Financial advice and expertise are available to help develop a well thought-out succession plan, which can be followed over a long period of time."
BMO offers small business owners the following tips to get them started down the path to succession planning success:
- Consider every option: Whether a small business owner chooses to sell/transition to a family member or business partner, or dissolve the business completely, many complex issues need to be examined before a final decision is made.
- Get a head start: Many business owners assume the demand for their business will be there once they are ready to move on, but this is often not the case. Owners should begin planning for succession five to ten years in advance of them leaving the company to help ensure the full potential value of the business is realized and the succession process is smooth.
- Speak with a financial professional: Just as each business is unique, so is every succession plan. By working with a financial professional, small business owners can develop tailored solutions and an ideal succession strategy to meet their needs. Financial advisors can discuss key questions, including: Who should succeed you in your role? When would be the ideal time to begin the transition? How should the transition be structured?
For more information, please visit http://www.bmo.com/succession.
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Survey information: The 2012 survey was conducted by Pollara and was completed between August 13 and September 5, 2012 with a random sample of 500 Canadian business owners. Overall results are accurate to ± 4.4%, 19 times out of 20.