What Will Happen to Us Without Our Small Businesses?

As a large portion of owners of small- and medium-size businesses approach retirement, there is a challenge for our communities and our economy that does not garner the concern it should. This is a serious shift that our economy is going to experience, and I feel we are not ready.

In Canada, 97.8% of all business are a small business (<100 employees). This amounts to just under 1.2 million businesses and a similar number of owners. Small businesses account for 46.8% of jobs in the Canadian private sector employing 5.7 million individuals in Canada.? Small business also accounted for 35.1% of the Canadian GDP. Over 1/3 of the production in Canada is created by small business.

With an increase in the median age of our population, as the Baby Booms are retired or looking to retire soon, there is an increase in the number of business owners that are also looking to retire. In a 2023 article published in the Financial Post by Brett House, claims that, “76 per cent of Canadian owners of small- and medium-sized enterprises (SMES) — companies with between one and 499 employees — plan to exit their businesses during the next decade.” This transition will affect 4.3 million employees.

If the transition from one owner to the next is easy — with little unknowns nor unexpected challenges, the process is well known and documented, and everyone understands how to manage their responsibilities — there will be few challenges for these employees. Unfortunately, this is not the case.

It is estimated that 42 percent of Canadian small business owners are “unsure about their future” and 36% “Don’t plan to give up their ownership until they are not well enough to manage,” according to an Environics Research report.

I’m at the age where myself and my friends are starting to see our parents’ health decline. My experience of old age growing up, was modeled by my Nana and her two sisters. They each lived on their own until they were in their eighties, and then, before they could not manage on their own, they moved into a retirement home. No one had to tell them when to go or where, or provide housing for them because they could not afford to be somewhere on their own. They had their future planned out. Their kids, (my mother and her siblings), helped them move, but they didn’t have to make painful, hurried decisions for them, based on little knowledge of what would be best. I thought this was how everyone would approach being elderly, but I was very wrong. My own father, dwindling in his physical health, looked after my mother, as her dementia progressed beyond his capabilities. He didn’t want help from outsiders, he didn’t want to move, he didn’t think mom was that bad, until she was.

It was challenging to watch from the outside, as the stress of managing something he had no experience with the afflictions that took over their lives, until one day, he was in the hospital, and their home had to change, quickly. Mom could not be on her own. She could not cook. She didn’t know where she was. If she was left alone with food, she would eat until she threw-up. She could not bath herself. We were in shock at how little she could do and how much my father was responsible for.

Now imagine you are one of the 1.5 million employees of those retiring-aged owners in the next decade, that are unwilling to prepare for their exit of their business and don’t plan on giving up their business until they are can no longer look after it, like my father could no longer look after his home and my mother. What happens when they suddenly pass, get ill, or simply decide one day, they are done? What happens to the jobs? What happens to the businesses income? What happens to our economy?

There are so many moving parts in a transition from one owner to the next. For a relatively smooth transition, it takes a minimum of 2 years to prepare the business, whether this means preparation for sale or internal succession. And then, there is the sale, and the transition itself, adding on months or years. One succession lawyer I heard speak years ago, shared that in his experience, it took 3 to 10 years to get through the entire transition, into the new owners hands, and running smoothly again. This is with planning.

If you know a business owner that has not built a business to run without them, their business, their employees, and the community they serve, are at risk of losing everything, the day they no longer wish to continue with, or can manage, as the owner. My recommendation is to start asking questions about their plan. Having a business that can run without them is like having a will for their personal life. The business is well documented and the people know their roles, which ensures that sales happen, product is delivered, invoicing is sent out and people get paid. Having a succession plan also ensures that if something happens to the owner, the business can be easily sold, because a business that creates income and delivers product without having the owner to control everything, is valuable enough to be sold.

Ensuring the business survives well beyond the owner, is imperative to ensuring the continuity of the communities livelihoods. There is no doubt about it, a healthy and successful small business, with the stamina to survive long after the owner, is important to our society.

Epilogue: What happened to my parents, you might be asking? My father’s fall, that put him in the hospital was a symptom of stage 4 lung cancer he didn’t even know he had. He was able to do as much as he did through his sheer will. He passed within 3 months, on the day we confirmed a safe home for my mom, where she lived out her days with full care.

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