Many Ontario businesses unprepared for future change in leadership, survey shows

Succession planning among small businesses in Ontario still remains a chronic issue.

A recent survey of employers and businesses involving the Northern Policy Institute indicates 73 per cent of business owners do not have a plan in place to transition into new leadership.

Furthermore, one-third of business owners planning to sell or retire within five years do not have a succession plan in place or are not in processing of creating one.

The survey also showed that the leaders of many organizations are planning to sell or retire within the next 15 years. 

The Northern Policy Institute partnered with the Ontario Chamber of Commerce and Société Économique de l'Ontario to survey Ontario businesses and other employers about when they expect to undergo a change in ownership or leadership, and whether they have prepared a succession plan. 

The results and analysis were based off of comments from 1,912 respondents. More than 1,600 of those had fewer than 100 employees. The industries that provided the most responses were retail trade, professional, scientific and technical services, and the non-profit sector. 

The findings are concerning for organizations with fewer than 100 employees, particularly those more likely to undergo succession within 10 years.

In a news release, NPI said while this provides many opportunities for people to take over an existing business, on the flip side, there’s cause for concern for those businesses that are unprepared for a change in leadership. That can lead to “economic disruption.” A poorly managed succession can lead to a bad organizational performance, a drop in the value of a business and job losses among employees.

“Economic growth depends on the continued success of existing businesses, not just the creation of new ones” said author William Dunstan in a statement. “How we navigate the coming wave of business succession, therefore, will shape our economic future.”