Succession gap looms for Canadian businesses
With a wave of Baby Boomer business owners nearing retirement, Canada is on the brink of a generational shift that could reshape its economic landscape, a new survey finds.
Canadians aged 50 and older accounted for 37.5% of the population in 2024, a share projected to climb to between 38.6% and 49.4% by 2065. These aging entrepreneurs—who currently are the primary decision makers of 62% of Canada’s small and medium-sized businesses—face pivotal decisions about whether to sell, close, or transition their enterprises to successors.
The stakes are enormous: nearly two-thirds (63.8%) of Canada’s private sector workforce depends on these business owners to navigate succession planning effectively, with outcomes that will ripple through employees, communities, and local economies.
Despite the significant implications, a new Succession Readiness Report from MNP LLP reveals that the majority of retiring business owners are postponing or underestimating the importance of succession planning — something many may struggle to prioritize amid the day-to-day demands of running their companies.
Nearly two-thirds (64.1%) have considered their exit objectives but have yet to formalize a plan, while one in five (20.7%) have not even started thinking about one. Alarmingly, fewer than one in 10 (8.5%) have established clear, actionable goals for the changeover which threatens to leave a significant gap in Canada’s business ecosystem.
“We are witnessing one of the most significant wealth transitions in history as Canada’s workforce ages and more small business owners approach retirement. At the same time, economic uncertainty continues to rise for businesses across the country,” says Kerry Smith, national leader, Family Office Services at MNP LLP. “For many owners, their businesses are not only the cornerstone of their financial futures but also a vital source of jobs and stability for their employees. The future of our communities and local economies hinges on these owners making strategic decisions and preparing for effective succession and exit planning.”
Small and medium-sized businesses are the backbone of Canada’s economy, employing nearly 7.8 million people in the private sector4. The significant exit planning gap increases the potential for business closures, jeopardizing jobs and community stability. Recent data from Statistics Canada found that the business closure rate edged up to 4.8% in October 2024, surpassing the historical average of 4.6%.
Smith emphasizes that while many business owners understand the importance of planning, far too few have taken the critical step of putting pen to paper. “A clear, actionable succession plan isn’t just a best practice—it’s critical,” he says. “For owners, it secures their financial future. For employees, it provides stability and confidence in their jobs. Without a written plan, transitions become far more uncertain, putting the survival of the business and the livelihoods of its workforce at risk.”
Succession planning is often overlooked by owners, who may delay critical decisions while waiting for ideal market conditions—or until unexpected health emergencies force them to take action.
“In a lot of cases, owners have some key staff members who are vital to the business operations. Having a plan in place ensures the integrity of the business can be maintained in case of an emergency,” explains Smith.
Early planning also offers owners the flexibility to define a role that suits them, both before and after the transition. While retaining key staff is integral to a successful exit plan, only about two in five (39.3%) Canadian business owners have thought about which employees are vital to the business through a transition. Nearly a quarter (23.3%) of business owners haven’t considered employee retention at all, according to the MNP survey.
