Only 25% of the families were found to be having a business succession plan in place that all family members agree to, the study stated.
David Sung, president of Nicola Wealth Management said: "About 90% of all businesses in Canada are family-operated. The implications of senior family business owners not having a succession strategy can’t be stressed enough."
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"With family businesses, succession can be especially complicated because of the relationships and emotions involved – and because most people are not that comfortable discussing topics such as aging, death, and their financial affairs. Perhaps this is why more than 60% of family-owned businesses don’t survive the transition from founder to second generation," Sung added.
Though 25% of the respondents believed that transition to the next generation will happen within the next five years, hardly 50% were found to have a shared family vision for the future of the business and 36% said that they clearly understood who will own the family’s assets and/or business in the future.
Though 50% of the elder generation has determined how much money needs to be set aside to fund their retirement, only 41% have actually started saving that money outside the family business.
The challenges that the future generations would encounter while working in the family business were cited to be family conflict (59%), strategic direction (58%), training future owners (54%), roles and responsibilities (54%), how decisions will be made (49%), setting clear expectations (46%), exit strategy and liquidity (43.5%), and competitive pressure (33%).
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By GlobalDataNicola Wealth Management is a US-based midsize private financial planning and investment counsel firm that caters HNW business owners who aim to better understand the current state of readiness of family businesses with regard to succession.
