Businesses advised to plan ahead for succession

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This article was published 08/02/2024 (790 days ago), so information in it may no longer be current.

DELORAINE — Industry experts are advising business owners to plan their successions ahead of time, as it is never too early to plan retirement.

The topic was explored during a panel discussion moderated by Tiffany Cameron, owner of Ice Cream Island in Virden, at the Southwest Business & Entrepreneurship Expo held at Deloraine on Wednesday.

The panellists included Nicole Hooper, a partner and business advisor with MNP in Deloraine, real estate professional Ketan Patel and Drew Wilkinson, owner of Circle M Furniture. The discussion centred around the critical aspects of business succession planning and its implications for entrepreneurs in southwest Manitoba.

Hooper emphasized the importance of early planning. “It’s never too early to start thinking about it,” she said.

Hooper highlighted the commonality of family transitions, especially in the agricultural sector, stating, “Mainly, for me, most of it is family transitions. I have a lot of ag clients — this is a big, good area.”

Hooper stressed the need for clear communication among family members and the development of a comprehensive plan.

Delays in succession planning often lead to difficulties in meeting retirement goals, adverse tax consequences and family disagreements, especially in farm transitions. Regarding financial considerations, Hooper advised entrepreneurs to look beyond the bottom line and consider factors such as management efficiency. “You need to look a little deeper.”

Wilkinson emphasized the importance of early planning when discussing his experience.

“Acquiring a furniture store approximately a year ago, I sought mentorship, which proved to be a significant aspect of the process.”

Highlighting a notable challenge, he said some businesses lacked modernization and rely on outdated technology.

“The business I bought wasn’t really up to date — like the highest form of technology in abuilding was a fax machine. The accounting was being done with pen and paper,” he said.

He emphasized the significance of mentorship in his strategy, saying it played a substantial role in the plan and was explicitly included in the purchase agreement as they endeavoured to modernize the business.

Patel shed light on the perspective of outside investors looking to enter southwest Manitoba, pointing out the significance of a welcoming community, profitability and essential amenities like schools and hospitals in influencing their decisions.

He said challenges for entrepreneurs moving to smaller communities include adapting to a different lifestyle and difficulties in securing financing, “especially after COVID in the hospitality industry,” since “hardly any lender wants to finance those businesses.”

Discussing the evaluation of business financials, Patel acknowledged that negative financials might not necessarily indicate a failing business. “Financials are not the only thing you look for when you purchase a business, especially the small companies, but unfortunately banks would look at only that part first.”

Cameron said the consequences of not having a succession plan are grave.

“These include difficulties in selling the business at its optimal value, unexpected expenses and potential business closure.”

Expo host committee chair Glenn Schellenberg said emphasis was placed on succession this year to address the needs of businesses looking to sell, retire or transition.

“They require tools to facilitate finding the next owner or the next generation to carry on,” Schellenberg told the Sun. “We understand that our strength lies in co-operation and working together and that’s why we approach this as a regional effort, with seven municipalities supporting each other. When one community thrives, it positively impacts the others.”

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