Are you planning for business succession?
A "silver tsunami" of boomer retirement is coming for small- and medium-businesses. Social acquisitions can be part of the solution.
Meg Ronson, from the University of Waterloo's Legacy Leadership Lab (L3), says Canada faces a massive wave of business owner retirements in the coming years.
"Roughly 700,000 small businesses are at risk of closure due to a lack of succession planning," Ronson said in a Community Ownership Collaborative webinar October 29, 2020. "Up to one million jobs are at risk because of this challenge."
But many business owners aren't planning for their business succession—in fact, many business owners are delaying retirement because they haven't come up with a plan.
"It takes a lot of time and effort and money to plan for that kind of an exit and to find a business. A lot of business owners don't even know where to begin," Ronson says.
Even when business owners want to sell their business to their employees, it can be hard for employees to find the capital.
That's where the concept of social acquisitions comes in. What might a social acquisition look like? Think: employee-owned cooperatives, ESOPs, and B-Corps. Municipalities and charities can also acquire assets in a community.
"There's all kinds of ways that a business can become social purpose," Ronson says.
Conditions for a strong social acquisition , according to Ronson, include:
High levels of community value (intersocial capital)
High levels of social capital (intrasocial capital)
Firms that are labour intensive but low in financial capital, like the service sector
Firms and industries with a high degree of employee collaboration
Knowledge and adoption of the cooperative identity
A depression economy
The Legacy Leadership Lab convenes people to help business owners plan for succession in ways that can benefit the community, employees, and continue the owner's entrepreneurial legacy. Learn more here.
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