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Canadian small business owners delaying retirement

Gail Johnson

Raymond Aubin has been running the Vankleek Home Hardware in eastern Ontario for over a decade now. Despite the long hours that go hand in hand with running his own business, he loves it. That's a good thing, because at 54, he has no plans on retiring anytime soon.

"I work seven days a week most of the time," Aubin says. "With the economy, things are a little harder these days. You've really got to work hard to get people to come into your store. At some point I'd like to slow down a bit. My wife [who also works in the store] would like to slow down a bit too."

The Aubins are among so many Canadian business owners who are delaying retirement because of tough economic times. According to a new report called Passing on the Business to the Next Generation, the 2008-09 recession prompted many entrepreneurs to stay in business longer than they'd anticipated.

Based on survey data from the Canadian Federation of Independent Business (CFIB), the report found that nearly a quarter of business owners say they've pushed back their exit date by one to four years because of the economic downturn.

"Our members are not recipients of government pensions and are relying on the value of their business investments to pay for their retirements," says CFIB president and CEO Dan Kelly. "Like many Canadians, they've had to rethink those plans because the value of their assets has eroded. The recession was a significant factor. This has meant that for many of them, their succession plans aren't as well-advanced as they should be."

Kelly says it's understandable that succession planning slides down business owners' to-do list, given that they're so focused on the day-to-day demands of running the operation. Just ask Aubin how time-consuming that can be.

"I do all the bookwork myself to save money on costs," he says. "I don't have time for hobbies. At some point I'd like to slow down a bit, but I do enjoy what I do."

Aubin notes that his son is almost finished university, where he's studying business administration, and he might step in to take over the family business once he graduates.

However, Kelly says that even if retirement seems a long ways off, business owners need to plan their succession well in advance.

"Once you get past start-up stage, when the business is up and running, that's a good time to start thinking about succession planning," Kelly says. "There's planning for retirement but then there's also planning for to life events. There are countless stories of business owners who have a heart attack then family members and employees end up trying to scramble to keep business afloat.

"You do need to take these things seriously at an early stage in the business cycle," he adds, noting that family dynamics can sometimes make succession planning more complicated.

According to Nicola Wealth Management, a Vancouver-based financial planning and investment-counsel firm, about 90 per cent of businesses in Canada are family-operated. Sixty-seven per cent ranked succession and retirement planning as their top internal business concern in the company's recent Business Families survey.

The survey also found that 75 per cent of family businesses project the transition to the next generation will happen within the next five years, while only 24 per cent have a succession plan in place that all family members have agreed to.

"A lot of business owners say they don't want to retire because running their business something they love so much," Kelly says. "But it's important to have a plan in place. You can deepen it over the years, but business owners should get started at an early stage, whether it's to cover what would happen if something happened suddenly or if they want to step back a little bit toward retirement."