The majority of businesses are not transferable: a reality that is shaking up the entrepreneurial landscape

In Quebec, as elsewhere, the issue of business transferability is a major challenge in the context of the aging of SME owners. However, a striking reality persists: the majority of businesses are not transferable . This situation poses serious challenges for business continuity and the preservation of local jobs.

Why are many businesses not transferable?

• Lack of strategic preparation The portability of a business relies on its ability to operate without the day-to-day presence of the owner. However, a significant proportion of SME managers run their businesses in a highly centralized manner, where key processes, customer relationships and even employee management depend on them.

  • Key statistic : According to the 2022 Quebec Entrepreneurial Index, only 38.8% of owners intending to sell or transfer their business have a structured succession plan.

• Weak internal systems Many SMEs lack strong organizational structures:

  • Lack of clear documentation of processes.

  • Lack of modern management tools.

  • Over-reliance on specific contracts or customers.

These flaws reduce the attractiveness and value of the company for potential buyers.

Unattractive or opaque finances

A company's finances must be transparent and healthy to attract buyers. However, many SMEs have accounting practices that lack rigor or show insufficient profitability, making it difficult for buyers to obtain financing.

An organizational culture that is difficult to transmit

Company culture, often shaped by the founder, can be an asset or an obstacle. An overly personalized culture or a team that is not very engaged can discourage buyers.

The consequences of non-transferability

1. Business Closures When owners fail to transfer their businesses, it often leads to their outright closure. These closures represent a significant economic loss, particularly in rural areas where these businesses play a key role.

2. Loss of local jobs Non-transferable SMEs put jobs at risk, affecting the families and communities that depend on them.

3. An impact on economic competitiveness An economic fabric weakened by business closures reduces the competitiveness of local markets in the face of external or international players.

How to make a business transferable?

1. Investing in organizational structure

   • Standardize key processes.

   • Implement modern management tools.

   • Make the company less dependent on the presence of the manager.

2. Develop a clear succession plan A structured succession plan allows you to anticipate the critical steps for the sale or transfer, while maximizing the value of the company.

3. Making finances attractive and transparent

   • Have the financial statements audited by experts.

   • Reduce unnecessary debt and improve profitability.

4. Supporting owners in the transition Organizations such as the Centre de transfert d'entreprise du Québec (CTEQ) or expert consultants can play a key role in identifying obstacles to transferability and addressing them.

Act before it's too late

The low transferability rate of Quebec businesses is a warning signal for the entire entrepreneurial ecosystem. It is imperative that SME owners become aware of this issue and take action to prepare their business for a successful transfer. By strengthening structure, governance and transparency, businesses can not only increase their value, but also ensure their sustainability beyond their current manager.

The transferability of a business is not a coincidence. It is the result of strategic work, a clear vision and proactive preparation. Without these elements, the majority of SMEs risk disappearing, taking with them decades of effort and contributions to the local economy.