By Katrina Barclay, L’Université d’Ottawa/University of Ottawa and Peter Jaskiewicz, L’Université d’Ottawa/University of Ottawa
Like previous federal budgets, the recently released Budget 2025 fails to acknowledge a pressing generational shift for Canada’s economy: the succession crisis facing most Canadian family-owned businesses.
Over the next decade, 60 per cent of family enterprises will change hands — if those ownership transfers happen at all.
When ownership transfers stall or fail, jobs, investments and tax revenues are lost — not to mention the loss to the social fabric in communities across the country. Yet, despite these stakes, Budget 2025 offers little recognition of this looming challenge.
The government states that it is “ensuring Canadian workers and businesses have the tools they need to drive this transformation and thrive from it.” Yet there is no evidence of any measures to support and equip entrepreneurs and family business owners for generational transitions.
Family businesses are the backbone of the economy
In Canada’s private sector, family firms own nearly two-thirds of all businesses, from mom-and-pop shops to international and global leaders in their respective sectors. Together they employ more than half of workers and generate nearly half of our private sector GDP.
The economic pressures and uncertainties — looming tariffs, the affordability crisis, inflationary price increases, to name a few — currently facing Canada make this moment more perilous.
Without thoughtful policy support, Canada risks losing not just businesses, but the jobs and community investments they sustain.
The looming succession crisis
Succession is notoriously difficult to navigate for businesses. Two-thirds of businesses don’t have a formal succession plan.
Of those that do, most rely on accountants and lawyers for guidance. While accountants and lawyers are needed, they’re rarely equipped for the family dynamics and communication breakdowns that derail even the best financial plans.
Even more worrying, 39 per cent of business owners surveyed by the Canadian Federation of Independent Business said they relied on no one or did it themselves.
Running a business and successfully transferring ownership are two very different skill sets. Yet Ottawa continues to treat succession as a matter of tax incentives for the owners — for example, by cancelling the proposed capital gains increase — while ownership succession is also (and often foremost) a deeply human and strategic challenge.
The government must confront the most complex parts of succession: enabling solid business governance, responsible next-generation owner development and fostering healthy family dynamics to support smooth ownership transitions that ensure the continuity and growth of the firm.
This is especially important as more enterprising families begin to exit their firms to invest in family foundations or offices, or bring in outside investors and leadership for the first time.
The incumbent generation of business owners who built this country will only pass on their business once. The government need to give them the tools to do it right.
3 things the government should do
If Budget 2025 truly aims to ensure that Canadian businesses “thrive from transformation,” it must invest in succession readiness. Here’s what the government should do to accomplish this:
1. Assess the state of Canada’s family businesses
Canada lacks comprehensive, detailed and continuous national data about family firms. The government should support the collection of nuanced family business data. This should be done by Statistics Canada in partnership with universities and institutes like ours, the Family Enterprise Legacy Institute at the University of Ottawa. This would provide reliable evidence to measure the pulse of the largest part of our economy, highlight major issues and inform effective policy.
2. Scale owner empowerment
Few programs exist to help businesses navigate succession. The current offering amounts to a few paragraphs on the Government of Canada website. The government should support the creation and delivery of multilingual programs to train any potential successors in best practices on topics such as family dynamics management, succession processes, resilience in times of uncertainty and effective governance.
3. Build hubs of excellence
Canada already has world-class family business researchers, advisers and peer networks, but they are disconnected and underfunded. What’s missing is a federally supported institute bringing together associations, institutes, centres, foundations and organizations to pursue a co-ordinated strategy to connect research, training and advisory support. Along with owners and successors, the hub could help prepare advisers, accountants and lawyers.
A high-yield investment in Canada’s future
Supporting successful succession is not a subsidy. It is a high-yield investment with returns for every community and society at large. It is also a safeguard for the 6.9 million Canadians who depend on family businesses for jobs and nation-building projects.
Consider the federal Major Projects Office, which has been tasked with fast-tracking nation-building projects. As with every project in Canada, they are supported by small, medium and large family-owned construction firms, trucking companies, suppliers, tradespeople, Indigenous enterprises, manufacturers, fabricators and other service providers.
Without healthy, well-transitioned family businesses, those projects and the jobs they sustain are at risk.
Succession planning is about preserving Canadian ownership during the largest intergenerational transfer in our history. Without thriving family businesses, our economy will not prosper. Ignoring succession could end up being not just a policy oversight, but a nation-building failure.
Katrina Barclay, Executive Manager, Family Enterprise Legacy Institute (FELI), L’Université d’Ottawa/University of Ottawa and Peter Jaskiewicz, Full Professor and Patricia Saputo Distinguished Professor in Family Enterprise. Academic Director of the Family Enterprise Legacy Institute (FELI), L’Université d’Ottawa/University of Ottawa
This article is republished from The Conversation under a Creative Commons license. Read the original article.
