TORONTO, ONTARIO--(Marketwired - Nov. 4, 2013) - November 4, 2013 - When Ed Mirvish founded Toronto landmark discount store 'Honest Ed's' in 1948, one wonders if he ever imagined that someday it would be redeveloped and repurposed as prime real estate for Toronto's condo boom.
Whether Ed predicted this transformation or not, he did wisely hand the reins of his empire to the next generation, allowing them to make key decisions to protect the family legacy.
The founding generation of many family owned enterprises are headed for retirement in record numbers in the next five years. These companies represent an estimated 80-90% of all North American businesses,* and could be the first signs of an impending 'succession tsunami' that will create a radical transformation across the Canadian business landscape.
"The Honest Ed's sale makes a lot of business sense. Too many family companies implode because legacy pressures prevail and a tired/outdated business is kept alive (and subsidized) when it should be modernized for current and future realities," said Allen Taylor, President of CAFE Central Ontario. "I personally applaud the family's decision to redeploy one asset (real estate) and relocate the other asset (the business) in order to maximize their return."
Recent polling by The Canadian Association of Family Enterprise (CAFE) on this impending 'succession tsunami' has revealed that while 81.8% of businesses would choose to hand their family business over to a family member, only 48.5% have the expectation that a family member would, in fact, choose to take over the business.
"We read the disparity between the desire to pass the business to family versus belief they would accept the job as a clear trend of younger generations opting out," added Taylor. "When you consider this could impact so many Canadian family enterprises in the next five years, you can see why this will be a topic of concern at our upcoming Family Business Forum."
CAFE's bi-annual Family Business Forum event will be held November 5, 2013 at Toronto's Glenn Gould Theatre. It is a "short talks," 1/2 day conference that provides business families with timely relevant information in a high impact format. Amongst the networking and speaking activities scheduled, delegates will engage in discussion about the succession tsunami with an eye on sharing experiences, concerns and solutions.
"The CAFE Family Business Forum will bring together some of the most accomplished family businesses leaders from across the country, including speakers John E. Peller of Andrew Peller Limited, Domenic Primucci of Pizza Nova and Steve Beauchesne of Beau's All Natural Brewing. These leaders in family business are being proactive in training the next generation of leaders for success." added Taylor. "This is an ideal environment to tackle all issues of concern."
71.4% of Canadian family businesses polled believe that the most likely family member to take over would be a child, but worry that the next generation may lack the experience to lead. Ad-hoc areas of concern identified by family business owners included lack of broad business experience, lack of experience outside of the family business first, and having the skills necessary to manage staff and the family business.
One surprisingly bright spot from the survey was that business optimism seems unanimous among respondents with 100% saying that they believe their company will remain profitable for the next 5 years even without them at the helm.
"This shows a lot of confidence from family business owners both in the economy and the processes they set up during their time in a leadership role," added Taylor.
*Source: Family Firm Institute Inc.