Canadian researchers have done the math, but the story could be the same for the U.S. market: Not so far in the near future, a massive wave of retirements by business owners could pose a huge risk to the economy.
CIBC World Markets' research indicates that half of all small- and medium-sized businesses in Canada are set to retire in just the next decade, with more than 300,000 businesses poised to transfer control in just the next five years.
All totaled, that will mean almost $2 trillion in business assets that's set to change hands in a very short amount of time. That number is also expected to balloon to $3.7 trillion by 2022, with 550,000 owners leaving their businesses through retirement.
"Given this magnitude, a faulty or badly executed succession planning process could have a ripple effect throughout the Canadian economy via reduced productivity, job losses, premature sales and increased bankruptcy rates," the report added.
Unfortunately, as is the case in the United States, almost half of those business owners at pre-retirement age (55 to 64) have yet to start discussing the issue of handing over the keys to their family members or appropriate business partners.
"At this stage of the game, a small business's principal strength - the reliance on the human capital of the owner in almost every aspect of the business - is also becoming its primary weakness. Adequate succession planning requires time and is often measured in years, not days or months," the report concludes.
No matter what side of the border they're on, small businesses - even retirement advisor practices - face the same issues of faulty succession planning.