Whether they’re expanding or winding down, entrepreneurs need to prepare
As young small-business proprietors set their sights on expansion, a majority of older owners have no such plans, with nearly a third planning to give up the reins. But both groups need help as they face uncertainty.
Those were the major findings of a new poll of business owners by CIBC. The research found 72% of young small-business owners aged 25-39 exported goods and services, compared to 60% of those aged 40-59 and 37% of those aged 60 and above. In addition, 46% of young owners have increased their focus on international growth within the last five years, as opposed to only a third of those aged 40-59.
“Business owners typically wait until later in their growth cycle to expand abroad, but it's happening far sooner with the rise of digital commerce and adoption of new technologies that create more cost-efficient growth opportunities,” said Andrew Turnbull, senior vice president of small business banking at CIBC. “That's helped accelerate the pace of growth, particularly for younger entrepreneurs.”
The accelerated growth has also created challenges and concerns for entrepreneurs. Competition was the top challenge across all age groups. Other concerns among those under 40 were sources of future growth (25%), their ability to respond quickly to changing market needs (25%), and fluctuating currencies (24%). Trade uncertainty was also a concern among 59% of all business owners, with 57% worried that changes to NAFTA could impact their business negatively; among those under 40, the numbers jump to 67% and 65%, respectively.
“It's important to have the right team of advisors to build a growth plan that prepares and helps you enter new markets confidently,” Turnbull said.
Expansion tended to be less of a concern for older business owners. Sixty-three per cent of business owners aged 60 and above have no plans to expand or grow in the next year; 36% are planning to close, sell, or transfer their business. “The recent gains in the economy and in real estate values have prompted some business owners to consider selling,” said Sean Foran, managing director for business transition planning at CIBC Wealth Strategies Group.
However, 78% of the aging business owners polled admitted they didn’t have a formal or detailed plan in place for retirement or in the event of an unexpected emergency. “The biggest mistake small business owners make is not having these conversations early enough,” Foran said, noting that the process can be complicated and have numerous adverse tax implications if not done properly.
“It's important to involve a team of experts including lawyers, accountants and financial advisors to achieve a higher valuation, maximize retirement income and reduce their overall tax bill,” he said.
For more of Wealth Professional's latest industry news, click here.
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Those were the major findings of a new poll of business owners by CIBC. The research found 72% of young small-business owners aged 25-39 exported goods and services, compared to 60% of those aged 40-59 and 37% of those aged 60 and above. In addition, 46% of young owners have increased their focus on international growth within the last five years, as opposed to only a third of those aged 40-59.
“Business owners typically wait until later in their growth cycle to expand abroad, but it's happening far sooner with the rise of digital commerce and adoption of new technologies that create more cost-efficient growth opportunities,” said Andrew Turnbull, senior vice president of small business banking at CIBC. “That's helped accelerate the pace of growth, particularly for younger entrepreneurs.”
The accelerated growth has also created challenges and concerns for entrepreneurs. Competition was the top challenge across all age groups. Other concerns among those under 40 were sources of future growth (25%), their ability to respond quickly to changing market needs (25%), and fluctuating currencies (24%). Trade uncertainty was also a concern among 59% of all business owners, with 57% worried that changes to NAFTA could impact their business negatively; among those under 40, the numbers jump to 67% and 65%, respectively.
“It's important to have the right team of advisors to build a growth plan that prepares and helps you enter new markets confidently,” Turnbull said.
Expansion tended to be less of a concern for older business owners. Sixty-three per cent of business owners aged 60 and above have no plans to expand or grow in the next year; 36% are planning to close, sell, or transfer their business. “The recent gains in the economy and in real estate values have prompted some business owners to consider selling,” said Sean Foran, managing director for business transition planning at CIBC Wealth Strategies Group.
However, 78% of the aging business owners polled admitted they didn’t have a formal or detailed plan in place for retirement or in the event of an unexpected emergency. “The biggest mistake small business owners make is not having these conversations early enough,” Foran said, noting that the process can be complicated and have numerous adverse tax implications if not done properly.
“It's important to involve a team of experts including lawyers, accountants and financial advisors to achieve a higher valuation, maximize retirement income and reduce their overall tax bill,” he said.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Hurdles ahead for business owning clients
Business owning clients need their advisors more than ever
