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Speaker projects 25 per cent business reduction
During the next five years, 25 per cent of businesses in B.C. will be looking to sell or transition, Corey Sigvaldson told the Williams Lake and District Chamber of Commerce at its monthly lunch meeting last Thursday.
“Eighty-five per cent is due to retirement and the aging population,” he said.
Sigvaldson works with Venture Connect, a company dedicated to working with businesses and communities.
The company was started by six community futures on Vancouver Island and the Sunshine Coast.
“We started doing research into the demographic shift taking place in B.C.,” Sigvaldson said. “We’re seeing store fronts more and more for sale and lease, and more businesses going down.”
Around 31 per cent of the 25 per cent will just close the doors, not transition.
“If you think of it as a street scape in your downtown, shut down one in 10 businesses and put up the empty sign on the door and think about the effect that has,” Sigvaldson suggested, adding it’s a picture that drove it home for him.
About half of the business owners planning to retire, plan to transition the business to a family member, he added.
Deciphering the numbers for the Cariboo region, he said there are 4,800 business, 2,600 have employees, and 2,200 are owner/operator.
“That 25 per cent that are going to transition represents 1,144 over the next five years,” Sigvaldson said. “I don’t know about you, but that’s a pretty big number. The 31 per cent that would close represents 55 business — large and small.” One of the biggest stumbling blocks is being ready to sell. Only six per cent have a plan, and the extent of the plan might be to call a realtor.
“I would call that a limited plan,” he commented. “I would probably want to do a little bit more.”
Another 29 per cent have an unwritten plan, but the vast majority has no plan and about 90 per cent have no identified buyer.
And the average time to sell a business is growing rapidly.
Back in 2008 it was about eight to nine months, a few years back it was about a year, and the most recent stats he’s seen are about 18 months.
However, those stats combine urban areas with rural areas, and urban areas have far quicker transitions.
“As business owners we can be our own worse enemies and get in the way of selling,” Sigvaldson said, suggesting business owners hire someone to help with the transition of selling a business. He also encouraged business owners to get their “house in order.”
Having the business finances prepared and an attractive looking business to show potential buyers is two ways to achieve that order, he added.