Sara Crosbie, a writer with the Globe and Mail, recently published an article on the succession planning crisis looming over Canadian family businesses. In her article, Ms. Crosbie refers to a study completed by Deloitte and Touche, which indicates that two-thirds of Canadian families have no written contingency plans to guide them through a disability or death.
To understand the importance of family businesses to the Canadian economy consider the following study which was completed by Deloitte and Touche and found that “family businesses have 4.7 million full-time employees, 1.3 million part-time workers and sales of around $1.3 trillion.”
Ms. Crosbie states that the lack of succession planning could be attributed to the idea that most parents think, “there’s nothing here to pass on”, but the children think, “actually, I’m quite interested in taking it on.”
Dr. Pramodita Sharma attributes the lack of succession planning to the fact that “money and mortality conversations don’t usually take place until the head of a business is gravely ill. By then, it’s too late to start talking.”
Regardless of the cause, the consensus on resolving this looming crisis is rather simple, communication. Dr. Sharma says “Succession planning is either passing to the next generation of your family, passing to employees … selling it, to be merged or acquired by someone or it could be closing the business down. That needs preparation, too. You want to get the maximum value out of the business so it has to be a pro-active succession plan. You don’t want death to be the succession plan.”
Thank you for reading and have a great day.
Rick Bickhram – Click here for more information on Rick Bickhram.