It’s never too early for succession planning

Independent insurance brokers need to start planning for their succession earlier, according to a Canadian small business advocate.

“Our message is plan, plan, plan if you possibly can,” said Catherine Swift, president of the Canadian Federation of Independent Business (CFIB), speaking at the Succession Planning Conference hosted by Canadian Insurance in Toronto last week.

She cited a survey of small business owners conducted by the CFIB in 2006 that showed 52% had no succession plan in place. “Over half had nothing. Nothing at all,” noted Swift. “Obviously there’s a lot of work to be done here.”

Adding to the urgency of the situation is the fact that almost two-thirds of small business owners surveyed indicated they plan to exit their businesses in the next 10 years. “It’s pretty scary,” said Swift.

When asked why they don’t have a succession plan, six in 10 responded that it was too early to plan for succession. “It’s never too early,” said Swift. “Succession planning should be, in a perfect world, an annual event.”

She pointed out that business owners need to prepare not only for the hard issues, such as tax planning, financing and valuing the company, but also for the soft issues, particularly if there is family involved. She recalled talking to the 67-year-old son of a small business owner whose father had finally let him see the company’s books. “It’s human nature that people don’t want to let go. But sometimes they do that to the detriment of the business. And that’s what you want to try to avoid,” added Swift.

Succession planning is also something that business owners need to communicate to their partners and staff. “It should be something you let all your senior colleagues know about so everybody’s in the loop,” she said. “You have to look at it now or you’re asking for trouble.”

Look for full coverage of the Succession Planning Conference in the December 2008 issue of Canadian Insurance.

This story was originally published by Canadian Insurance Top Broker.