Today we’re diving into the challenges of passing businesses on to the next owners, with an article from The Globe and Mail reporting on the significantly large portion of business owners in Canada nearing retirement age. I’d love to hear your experiences on how you are thinking about handling your business when you’re ready to retire or exit, or how you took over your business.
The article explains that the majority of small & medium business owners in Canada are reaching retirement age, which can have a significant impact on these businesses, employees, and economy, as they decide how to handle their transitions. Some choose to close down and walk away, attempt to sell it, or pass it along to their children. One idea suggested was for local business associations to have matching programs to help with the sale process. Another pathway is shifting these businesses into employee owned companies to ensure longevity. Passing businesses on to the owners’ families can be tricky since not everyone may want or be ready to run a business.
In my shop, my dad was getting ready to retire and we had a big decision to make. I realized that I didn’t really want to run an ice cream shop for the foreseeable future, especially not alone. I got into it to help my dad and work with him, and it wasn’t my passion. We made the decision to try and sell it, and got really lucky to find a customer who was interested and able to buy it. Luckily everything worked out relatively smoothly, but there was a lot of stress in getting everything ready, figuring out how to go about selling, and all of the actual steps involved in the sale.
What’s your perspective:
- What are you planning on doing with your business when you’re ready to get out? How do you feel about the prospect?
- Did you take over from someone else? What was that process like?
Can’t wait to hear your thoughts!
In the News
I have a business partner and we have worked into our partnership agreement business valuation, right of first refusal etc.
we also have life insurance policies on each other- so if one of us passes, that money will go to pay the interest of the family of the person who passes... because being in business with someone's family is tough.. especially during an emotional time.
It's incredibly important to have these conversations and think these things through BEFORE they happen- especially if you have a business partner. It's easy to talk about things when you aren't mad or under duress. Not so easy when big feelings are involved that prevent you from clear thinking.
something my accountant said was to get as legitimate as possible as quickly as possible in terms of our numbers and P&L- that way- if we want to sell, the numbers are all there.
Co-Owner Amityville Apothecary
Instagram | TikTok @AmityvilleApothecary
Thanks for sharing, @DLRosenberg !
That sounds like it could have been a difficult conversation and a process to figure things out and arrange. I'm so glad that you did because it seems like a really great way to do things to keep everyone and the business protected and feeling comfortable.
We've just started to talk about this and since we don't have kids - ideally we'd sell the business or pass it on to managers and continue to live off of income generated from the business or its sale.
We took over MudFire from two people who had a 10 year business ownership plan. They were 35 when they started the business, and wanted to be out of it and into another business by the time they turned 45. We met them 1 year after their deadline and they were ready to sell. At the time I owned a retail supply store that was not doing well. I'd survived to year 6 but definitely didn't have the tenor for being shrewd enough with competitors and lacked discipline not to give a discount to a struggling artist. I knew what I really loved was sharing the practice of working in clay with others and a studio was the perfect solution. We just crossed year 10 at the studio and have paid the promissory note off completely.
We are still renting our location but look forward to purchasing the building in a few years once money not being spent on the promissory is able to be allocated to the purchase.
We had the experience of needing to buy out a partner only 3 months into the business takeover which was very stressful - especially in context with the failing retail store but we persevered with taking on commission work (I supplied art intallations to 220 hotels, and Daphne and I made 4300 plates/bowls/cups for a restaurant) all while running two businesses. Sleep was not a thing.
MudFire CEO | Square enthusiast
Visit me at MudFire online
Thanks for sharing @MudFire_Deanna !
I'm always so impressed when I hear more and more of the story of how you took over and grew. Congrats on 10 years and paying everything off! Having a plan of enabling someone else to do the same when y'all are ready to be out sounds really solid.
Having to buy someone out, especially that early, sounds extremely stressful. I'm glad you worked through that, and made it!
I am a full time business owner. I invest with Sofi! $100 per week to [almost] max out my Traditional IRA and get to investing asap! They automate investing, I do not need to do anything. So far, so good!
I haven't put much thought into it. I love the idea of starting a restaurant or purchasing a preexisting business. I am only 27 - I've got a little more time before I can coast.
What would you do when you're ready to step back?
I own and operate my salon suite. Since it's only me, I plan on hiring an assistant that is dedicated to learning my techniques to eventually take over my clientele. It would be an apprenticeship, so they would join me during my work day, and study what I do while working on my clients. When I am not working on clients, I will instruct them on different techniques I use on certain hair types and why, and they will work on a practice mannequin head (just like they would in cosmetology school). Once this individual is ready- in my eyes- they would be the one to take over the business. This ensures my clientele will be taken care of by someone who is familiar with them, their likes/dislikes, color formulas, and everything else pertinent to the client.
I love this plan @mickiesara , thanks for sharing!
Doing the apprenticeship to ownership model definitely can help make sure your business is in good hands, and your customers feel taken care of. Rooting for ya!
I didn't take over from anyone. I spent most of my adult life executing designs for corporations so this business, on purpose, is just for me. When I graduated with my BFA, doing something like this wasn't even possible but thankfully, there are so many options now (like Square) so why not make a living doing something I love doing?
So my exit strategy. I'm a solopreneur so it's just a fact when I cross over the rainbow bridge, that will be the end of my business. It's not something that can be sold and I understood that from the get go. When I'm not creating new designs, there will be no more. My licenses will pay into a family trust until they expire. I maintain a list so my kids will know what is what and from where. As far as a retirement plan... honestly, I don't expect to formally retire. This is way too much fun.