The mistake biz owners are making–and how you can help

If your client runs a business, planning for succession is part of planning for success.

Indeed, the majority of Canadian family-business leaders (95%) say securing their long-term future is key to success in the next five years, reveals a PwC family-business survey.

But there’s a problem: most companies are too focused on day-to-day operations, leaving little time to develop strategic plans that grow the business, embrace innovation and involve succession planning.

Read:

• Valuing a business if a marriage breaks down
• Creative planning for incapacity

While 56% of businesses have a partial succession plan, only 18% have a plan that’s been both documented and communicated, and 45% have no succession plan. A lack of talent may be an underlying issue, suggests the report. Some firms bring in an external CEO to help.

Interestingly, only 38% of survey respondents say succession planning is important, down from 53% in 2014. Although no reason for the decrease is given, the report reveals Canadian family businesses are now more likely to say they’ll pass on ownership to the next generation but also bring in professional management (27% compared to 11% in 2014). That professional help might ease the load and thus the concern about succession.

Or perhaps more and more business owners are ignoring the issue, requiring advisors to take the lead. Succession planning can be emotional, notes the report, as clients manage family members’ interests while ensuring business success.

The stakes are high, considering the large inter-generational transfer of wealth set to occur over the next few years.

Read: Your role in intergenerational wealth transfer

More than 2,800 firms worldwide and 74 Canadian family businesses were surveyed.

Find the full global survey report here, with tips on strategic and succession planning.

Also read:

Business owners aren’t ready for retirement: Report

When is it time to bring in a partner?

Canadian companies face barriers in expansion

What to do when a business owner goes personally bankrupt