The average age of Canadian SME owners is
As the Canadian population ages and the baby boomer business owners reach the age of retirement, it is expected that SMEs will either change hands or cease to exist. Those business owners with formal succession plans have the upper hand when it comes to successful business transition. Those who do not may be forced to close the doors.
In a TD Waterhouse poll in October of 2011, 76% of small business owners polled stated that they did not have a succession plan for retirement. 23% of those polled also stated that they would close the doors when it comes time to retire and 27% said that they did not know what they would do.
Another report, the CFIB Succession Planning Research report published in October of 2006 states that “Retirement is the main reason for business owners to exit their businesses. However â€¦ one in ten owners planning to exit their business have their sites set on starting another business venture.” (Bruce, 2). Of those business owners surveyed 34% stated they were going to retire within 5 years (between the years 2007-2011), 32% stated that they planned to retire in 6-10 years (between the years 2012-2016). These statistics point out that in 2006, 64% of SME had plans to retire within 10 years.
Application and extrapolation of the above percentages to the existing businesses recorded in 2011 (Appendix 1) show that there is a potential of 82,436 – 272,398 businesses that could exit the Canadian economy by the year 2016. These are of course offset by the average SMEs that are entering into the economy as stated in Appendix 7 of 10,000/year or 50,000 by 2016. The potential net decrease in SME’s by 2016 is 32, 436 – 222,398 assuming that those owners without formal succession planning are forced to close their businesses in order to retire.
This paragraph should tie in the effects on the economy if SME decrease throughout the country.
This paragraph should identify that young entrepreneurs are likely to start new businesses to bridge the gap and some of the current business owners will start new businesses but that there are restrictions to youth getting funding and such – only 1/10 older owners will start another business resulting in less being started than being closed.