In the mid-1990s, Myra Sable’s three children were graduating from university and entering their first careers. That’s when Ms. Sable, the owner of a Toronto-based gourmet food business called Sable & Rosenfeld, first started thinking of passing the business along to the next generation.
Original article extracted from The Globe and Mail. Article by ANDREA YU Published on NOVEMBER 22, 2024
In the mid-1990s, Myra Sable’s three children were graduating from university and entering their first careers.
That’s when Ms. Sable, the owner of a Toronto-based gourmet food business called Sable & Rosenfeld, first started thinking of passing the business along to the next generation.
“I always encouraged them,” she explains. “If one said: ‘Why don’t we advertise?’ or ‘Why don’t we do some sampling?’, I’d say ‘That is a great idea’. They had free rein.” Ms. Sable’s children ended up entering careers in catering, finance and the non-profit world. So when her grandchildren came of age in the late 2010s, she offered them the same opportunities to work in the business.
“I thought they might take over,” she says of her grandchildren. “They all spent time, to some extent, thinking about whether this was for them.”
Ultimately, the following generation, like their parents, entered other career paths. She wonders whether one of her grandchildren might decide to return to the business after spending a couple more years in the work force.
Ms. Sable, now 84, is happy to see her children and grandchildren thrive in their chosen careers. But that leaves her, like many older small business owners, without any clear successors for her company.
While Ms. Sable is still happy, healthy and eager to run her business, she regularly travels for trade shows and develops new products. It leaves little time for succession planning, but it’s an item that’s on her mind. “Everybody I know in business, they always say: ‘Myra, you need an exit plan’,” Ms. Sable says.
Marvin Cruz, director of research at the Canadian Federation of Independent Business (CFIB), says that situations like Ms. Sable’s are not uncommon among small businesses. In 2023, the CFIB released a report on the topic which revealed that 76 per cent of Canada’s business owners plan to exit their businesses within the next decade.
“In terms of the value of these businesses, it’s about $2-trillion in business assets at stake,” Mr. Cruz explains. “But only 9 per cent have a formal [succession] plan. So that raises some concerns.”
Mr. Cruz says selling to family can be complicated. “You have to make sure that your children or family members are on the same page as you regarding the business itself and any legacy that you’re trying to build with it,” he explains.
But what happens when children are on the fence about taking over? It can be tempting to wait and keep your fingers crossed, but that shouldn’t be an excuse not to begin succession planning.
Michael Morrow is a partner and managing director of the mergers and acquisitions department of BDO, a professional services firm. His department aids companies of all sizes, from those with a few employees to ones of $20 million-plus in value, to create and execute a business’s succession plan.
Mr. Morrow advises small business owners to start the process early: three to five years or more – and that’s in the case of a known successor. “It does take time to properly plan, set expectations and transfer the knowledge and know-how that’s required, as well as customer and supplier relationships over that period of time,” he explains.
If kids are on the fence, business owners should set a deadline for them to decide what to do so that business owners can take the next steps. Should family not be on board, other options include selling the business to a long-term employee, selling to a third party or shutting down the business.
For owners who are uncertain about their next steps, Mr. Morrow suggests connecting with a former business owner who recently undertook the succession process. “Speak to someone who has gone through that successfully,” he says. “They can help you understand what the challenges and risks around transition are and what should you be thinking about in advance.” Owners can also hire a professional services firm, like BDO, to help guide the transition process. Mergers and acquisitions departments will assist in every step of a larger business’s succession planning.
However, smaller operations can still benefit from a firm’s assistance to create a road map of what to do, like certain tax planning or legal tasks, then go about executing the transition themselves.
Any which way, Mr. Morrow reminds us that it’s a long, complicated process that takes time. “Where we’ve seen it successfully done is when that transition takes place over a number of years,” he says.
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