Owner retirements and economic pressures could change the SME landscape
Many of Canada’s small business owners could retire and close their businesses, impacting jobs and the economy, unless they have a succession plan in place.
With the average age of a small business owner in 2020 at 53 (Source: Statistics Canada) the ‘silver Tsunami’ added to the impact of tariffs and other economic challenges could mean business close, with potential disruption especially in rural communities where 98.6% of small businesses are locally owned.
MNP Family Office Services says that the agriculture industry is likely to be significantly impacted by this dynamic with 40% of farmers set to retire within the next decade, and an estimated $53 billion worth of farmland expected to change hands. Citing RBC data, MNP’s Succession Readiness Report notes that 88% of farms do not have a succession plan in place.
But the report reveals this is not unusual with MNP’s own survey finding that 64% of Canadian business do not have a succession plan and just 8.5% have clear, actionable goals for the transition of the business.
“Succession planning is not just about transition; it’s an opportunity to ensure independent businesses remain community-owned, strengthen local economies, safeguard jobs, and drive long-term prosperity,” said Kerry Smith, national leader of Family Office Services at MNP LLP. “Whether through family succession, employee ownership, or third-party sales, a well-crafted succession strategy secures both economic resilience and Canadian sovereignty."
Smith says that employee share ownership plans (ESOPs)and employee profit sharing plans (EPSPs) are underused but provide a clear way to transition ownership of a business.
“ESOPs and EPSPs can provide structured pathways for ownership transition while keeping businesses rooted in their communities,” Smith explained. “For Baby Boomer business owners facing retirement, these tools offer a means to ensure their companies continue thriving, while also allowing employees to build wealth and invest in the business’s success.”
MNP’s research found that 48% of business owners are confident their business’s net value will align with their retirement goals but have not sought professional advice to confirm this.
“The silver lining of the tariff war is that it encourages Canadian businesses to think ahead—identifying growth opportunities locally and exploring new markets beyond North America. Working with a qualified advisory team can help uncover opportunities that may have been overlooked,” Smith added. “Whether an owner plans to transfer leadership, sell to a third party, or pass the business to a family member, early strategic succession planning is crucial.”
