The Big Picture:

Most Canadian business owners plan to exit within the next decade, but only 9% have a formal succession plan. This guide covers five of the most common succession planning gaps: starting too late, running a business that depends on you, planning alone, not knowing your value or deal options, and finding a buyer you trust. For each one, it outlines practical steps to close the gap, from setting a target exit date and building a team of advisors to exploring options like seller financing, employee ownership trusts (EOTs), and entrepreneurship through acquisition (ETA).

You’ve spent decades building your business: not just your products and services, but your reputation, your team, and your relationships with customers. Deciding when and how to step away may be one of the biggest decisions you’ll ever make.

Planning for retirement also means planning for your business’s future, but most owners don’t have a strategy in place: according to the Canadian Federation of Independent Business (CFIB), 76% of owners plan to exit within a decade, but only 9% have a formal succession plan. Without one, your business, your team, and your retirement can all be put at risk.

Succession planning can feel overwhelming, but you’re not alone in facing these challenges, and you don’t have to solve them alone, either. Here are five of the most common succession planning gaps and how to close each one.

Gap #1: Starting too late

The gap: Many business owners treat business succession as an event instead of a process. They often don’t start planning for what comes next until they’re ready to retire. As a result, the process becomes more stressful and rushed than it needs to be, and can lead to missed details and hasty decisions.

Why it matters: Planning ahead not only puts your mind at ease, but also puts you in a more advantageous position for deal negotiation. You’ll be able to speak more confidently to the value and future of your business, and have less difficulty finding financing or buyers. Starting early also gives you time to structure the sale tax efficiently, which affects how much you keep.

How to close it: Start planning several years before you expect to step away. Set a target exit date, then work backward to build a timeline: when to assemble your advisors, when to get a valuation, when to start preparing your team, and when to begin looking for a buyer.

Gap #2: Running a business that depends on you

The gap: SMEs often run on the owner’s knowledge, skills, relationships, and decisions. This over-reliance can make it hard for them to step back from the business’s day-to-day operations and focus on what’s next. CFIB found that 39% of owners cite this as one of their main obstacles to succession planning.

Why it matters: Stepping back from something you’ve built is hard, and handing over what lives in your head is even harder. But a business that relies on its owner is riskier for a buyer, and that can affect both its value and how many buyers are interested. Business Link Alberta suggests a simple test: if you took three months off tomorrow, could your business keep going?

How to close it: Document your key relationships and processes, including how you make decisions. Identify a second-in-command or management team within your existing staff and gradually delegate decisions and responsibilities to ease the transition. A business that can continue to run without you is a business that lasts.

Gap #3: Planning for succession alone

The gap: CFIB’s research found that about two in five business owners plan their succession alone without an accountant, lawyer, or advisor. Succession involves tax, legal, financial, and emotional decisions, and no single person is an expert in all of them.

Why it matters: When you don’t know what you don’t know, you often end up making ill-informed decisions and losing out on opportunities or advantages you didn’t realize you had. This, combined with the stress of navigating such a momentous decision alone, can leave your business in a vulnerable position with an uncertain future.

How to close it: Build a transition team that can help you identify the best options and resources for your business. This may include an accountant or tax advisor, a lawyer, a business valuator, and an exit planning advisor or broker. If it’s a family business, you might also want to consult a family business advisor.

Gap #4: Being unaware of your value or deal options

The gap: SME owners might not know how much their business is truly worth to a potential buyer, or their options beyond selling to the highest bidder or how to structure a sale aside from a single upfront payment. This can lead to them coming away from a deal leaving money on the table, or accepting terms that don’t reflect what matters to them.

Why it matters: You may have more options than you realize. With seller financing, you agree to receive part of the sale price over time, which can help a qualified buyer close a deal they couldn’t otherwise finance. Eligible owners may also benefit from tax tools like the Lifetime Capital Gains Exemption, or from selling to their employees through an employee ownership trust (EOT), which comes with its own tax advantages.

How to close it: Get a professional business valuation early, and talk to a tax advisor and/or exit planning advisor before entering negotiations. Ask them to explain your options in plain language and frame them for your specific goals and situation. Avoid making major decisions, especially about taxes, until you’ve had professional advice.

Gap #5: Finding a buyer you trust

The gap: According to CFIB, 54% of owners say finding the right buyer or successor is their biggest succession challenge. Some aren’t sure anyone would want to buy their business at all. That uncertainty can be even greater in rural communities, where owners often have less access to brokers, advisors, and buyer networks.

Why it matters: The Business Development Bank of Canada (BDC) found that there are ten buyers for every seven sellers, but the real challenge is finding the right one who matches the owner’s values. Many owners also care deeply about keeping their existing staff, upholding their legacy’s reputation, and keeping the business’s roots in its community.

How to close it: Decide what matters most to you beyond price, whether that’s keeping your team, protecting your reputation, or keeping the business rooted in your community. Then explore the full range of options: family members, your management team, your employees (through an EOT), or an individual buyer through entrepreneurship through acquisition (ETA), where an entrepreneur buys and runs an existing business.

Where to start: your next step toward a successful transition

You don’t need to close all five gaps at once. Most owners start with one step: setting a target exit date, booking a conversation with an advisor, or simply asking yourself whether the business could run without you for three months. Each step makes the next one easier, and gives you more control over the future of your business.

These challenges were front and centre at Canada’s Succession Summit in Calgary this October, where business leaders, advisors, investors, capital providers, and policymakers came together to talk about what it takes to make ownership transitions succeed. Those conversations, along with responses to our Canadian ETA Perspectives Survey, will help shape a policy report to government focused on making business succession easier for owners across the country.

In the meantime, the summit’s sponsors already have resources available now:

• Get free guidance: Business Link Alberta offers one-on-one support for owners thinking about their next chapter.
• Start your plan: Richter’s succession planning checklist can help you organize your first steps.
• Explore your options: Platforms like Village Wellth connect owners with qualified buyers across Canada.

The business you’ve built deserves a future that reflects everything you’ve put into it. The best time to start planning for that future is now.

FAQ

When should I start planning for my business’s succession?

Ideally, several years before you plan to step away. Starting early gives you time to structure the sale tax efficiently, get a professional valuation, prepare your team to run the business without you, and find the right buyer. It also reduces anxiety over the future of your business and makes it easier to retire as planned. A simple first step is to set a target exit date and work backward to build a timeline, such as when to find an advisor or get a business valuation. Only 9% of Canadian business owners have a formal succession plan, so starting now puts you ahead of most.

What are my options for selling my business in Canada?

Owners can pass the business to family members, sell to their management team, sell to employees through an employee ownership trust (EOT), or sell to an individual buyer through entrepreneurship through acquisition (ETA). How you structure the sale matters too. Seller financing, share or asset sales, and tax tools like the Lifetime Capital Gains Exemption can all affect the outcome.

Who should help me plan my business succession?

Succession involves tax, legal, financial, and emotional decisions, so most owners benefit from a transition team. This typically includes an accountant or tax advisor, a lawyer, a business valuator, and an exit planning advisor or broker. For family businesses, a family business advisor can also help. About two in five Canadian owners plan their succession alone, so building a team early can help you avoid costly mistakes.