Great article in the Globe today… See it here.
The Business Transition Blog
As we prepare for a federal election in Canada, there is virtually no mention of the looming business transition crisis that will be created as boomers exit the workforce and more importantly, as boomer entrepreneurs retire from their businesses.
All parties and especially the Conservatives are banking on increased revenues from taxes to pay down the deficit, but a major fly in the ointment will be a shifting demographic that will have more people drawing from the government coffers and fewer people contributing.
Consider these factors:
- According to Stats Canada, in 2008 there were 5 million businesses in Canada. About half were self-employed individuals.
- 71% of entrepreneurs surveyed in 2005 indicated they intend to retire by 2015 – about the time the federal books are promised to be balanced. That’s 3.5 million business owners going from being productive tax paying individuals to starting to draw pensions
- 50% of entrepreneurs surveyed by American Express in 2010 indicated they wish they could retire right now.
- The American Express survey also found that 88% of entrepreneurs do not have a formal plan for retirement.
- US stats indicate that of all businesses that go up for sale, depending on the size of the company, 65% – 80% of them will not find a buyer.
- 27% of entrepreneurs are counting on the sale of their business to fund their retirement.
- 30% are planning to keep the company and withdraw profits to fund their retirement.
This raises many questions that I think our politicians need to consider and look for ways to be part of the solution.
- If 3.5 million businesses are going to lose the dedication and commitment of their current owners, who’s going to pick up the ball? Who will buy those companies? Who will drive the business in which the owner has mentally checked out? What is the impact on productivity, performance, and profitability? What will happen to the employees of those companies? What will happen to the suppliers, the customers and all the families affected by the changes?
- What incentives are in place to encourage young entrepreneurs to purchase existing businesses vs. starting from scratch? Very few young entrepreneurs dream of buying a company. But maybe they should.
- What assistance can the government or the banks with government backing provide to make it easier for young entrepreneurs to finance the purchase?
- While the government seems willing to provide bailouts to the big companies in old, dying industries, what are they prepared to do to help small businesses that create millions of jobs across the country?
I believe these issues will have a greater impact on our economy than the recent recession and yet no one seems to be paying attention.