Canadian business owners are undecided about a planned exit strategy with the vast majority unsure how, when or to whom they will relinquish their business.

According to a recent Harris/Decima study commissioned by BMO Bank of Montreal, over half (56%) of businesses polled are in the later stages of their enterprise and yet only 21% of these business owners have named a successor. Of those businesses who do not have a succession plan in place, 40% believe it is too early to do so. Yet, in stark contrast to this claim, more recent business owners see the value in putting a formal succession plan into place earlier in the business lifecycle.

Only 19% of business owners have identified a successor, yet just under one third of those have a transition plan in place, with training times varying greatly.

“Our research and experience advising business owners across Canada shows many are unprepared for the inevitable,” says Sean Foran, vp of succession planning at BMO Harris Private Banking. “Whether they intend to sell their business or hand it down to a family member, it’s important they begin planning as early as possible to ensure they get the most out of the many years of work they have put into the business.”

According to the survey, almost 40% of respondents say their ideal succession plan would involve selling their business to an outside party.

Only 17% said they would sell the business to a family member.

One quarter of respondents say they have no interested family members and 17% say they have no family members who could take it over.

Business owners are overwhelmingly intent on using the proceeds from the sale of their business as investment dollars. In fact, two-thirds of business owners surveyed say they will invest their business sale dollars — nearly the same number who intend to fund their retirement through RRSPs or other investments. However, 61% intend to rely in part on the Canada Pension Plan to get them through their retirement years.

Almost three-quarters of those surveyed are more than five years away from selling their business, providing ample opportunity for a carefully planned exit strategy.

The online Harris/Decima poll was conducted from February 5 to 14, and based on a sample of 400 Canadian business owners from across the country.