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Many employers across Ontario, including in Northern Ontario, will see a change in their owners or leadership in the coming years. Many of these employers have developed succession plans; however, a concerningly large share remain inadequately prepared for this transition. Northern Policy Institute’s latest publication explores the state of business succession and planning across Ontario.
NPI partnered with the Ontario Chamber of Commerce and Société Économique de l’Ontario to survey Ontario businesses and other employers about when they expect to undergo a change in ownership or leadership, and whether they have prepared a succession plan. Most business owners surveyed expect to sell or retire within 15 years. This will create opportunities for Ontarians to take over existing businesses, including newcomers, youth, and Francophones.
At the same time, high rates of business succession will require high rates of succession planning. Many employers have not developed succession plans, however, including some that are likely to undergo succession soon. Seventy-three per cent of business owners say their organization does not have a succession plan in place, and approximately one-third of owners who plan to sell or retire within the next five years have no succession plan in place or in the process of being created. Furthermore, although organizations with fewer than 100 employees were more likely to indicate that they expect to undergo succession soon, they are less likely to have a succession plan in place or in the process of being created.
Poorly managed succession is a problem both for the organization itself and for the wider economy. Organizations that struggle with succession are likely to see reduced performance and lost value. This can lead to reduced economic growth, job losses for employees, and reduced options for consumers. Therefore, increasing the number of organizations that adequately plan for succession will be crucial to ensuring that Ontario’s successful existing businesses continue to provide employment opportunities, goods and services, and economic growth even as their current leadership departs.
“Economic growth depends on the continued success of existing businesses, not just the creation of new ones” said author William Dunstan. “How we navigate the coming wave of business succession, therefore, will shape our economic future.”
Interested in learning more about the state of business succession planning in Ontario? Read the report: https://www.northernpolicy.ca/taking-care-of-business
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