NowNS: N.S. businesses handle challenges of succession

When you think of Nova Scotia’s aging population, what comes to mind? Is it the increasing demands on our health care system? The inevitable shifts in the housing market as more empty nesters look to downsize? Or perhaps your mind shifts to the economic implications of having fewer people working and paying taxes. Whatever your lens, there’s no denying that our demographics are a challenge. And yet when it comes to the labour force, our aging population represents an opportunity.

Over the next 10 to 15 years, aging land and business owners will be looking to relinquish, close or sell the assets they’ve spent decades acquiring — and there are a lot of them.

In the eyes of seasoned business owners like David Upton and Jim Drescher, their desire to step down is creating a distinct and unique opportunity for generations behind them to step up.

An intergenerational hand-off of established businesses could be a win-win.

“It can solve a problem for passionate young people who are looking to do something entrepreneurial, as well as for older people who want to slow down but don’t really know how they can,” explains Upton, who co-owns Common Good Solutions and at 61, is starting to think about succession planning. With a business partner who is 10 years his junior, Upton plans on taking a generational approach.

“I have a business partner who probably isn’t going to quit when I do, but where’s the 40-year-old or 30-year-old who’s coming in behind him? We need to think about having that next piece in place,” says Upton, who has begun casually meeting with potential candidates. “They may or may not own the business, but they’ll eventually do the work that I do. I’d like to think that over the next two or three years, I’ll be doing less.”

A gradual changing of hands and being mindful to hire people with potential future interest in the business is one strategy. At Windhorse Farms in New Germany, Jim Drescher and his wife Margaret are taking a slightly different approach.

Windhorse Farm is a sustainably managed forest and working farm, which is home to a 1.6-hectare organic permaculture garden, wood-product business, state-of-the-art retreat centre, off-the-grid cabins and a restored 19th-century farmhouse.

“Our main goal in coming here was to protect the forest,” says Drescher, referring to the 81 hectares that is a living model of sustainable forestry in Canada.

“We started thinking about succession the day we got here because we realized we could protect that forest for the moment, but still didn’t know how we would protect it in the long-run.”

The couple transferred ownership of the forest to 10 families, who each own an undivided one-tenth interest and have established a 99-year lease with the Windhorse Educational Foundation. The physical assets, including the farmhouse, conference centre and cabins, are being sold separately.

“We investigated many different options but decided this is the most secure one, within our legal system, for protecting the forest in the long term,” says Drescher. “Our intention is to connect people in nature with themselves, with each other and with their environment. We can talk about the property or the businesses, but the main thing we want to pass on is the purpose.”

When asked about how it feels to be entrusting your life’s work to someone else, Drescher acknowledges it’s a lot to process.

“It feels different on different days, but we’re delighted by the conversations that are coming up,” he says.

“A lot of people are showing up and reaching out, and it’s been interesting to talk to other people who are thinking about leaving their important work and passing it on to others. Windhorse is important in our life, but it’s just a dot. The topic of intergenerational transfer is huge. There’s a lot of complexity to it.”

Perhaps that’s why many business owners overlook it altogether. According to a report by the Canadian Federation of Independent Business, less than half of small and medium-sized enterprises have a succession plan in place. The implications of that reach far beyond the business itself. The federal government’s data shows that small businesses employ more than five million people, or half of Canada’s private sector labour force.

Here in Nova Scotia, independent businesses are critical to the economy of our rural areas. They provide essential goods and services and produce many spin-offs by keeping economic and social activity localized.

As Meggie MacMichael explains: “The closure of even very small businesses in rural places can have a devastating and domino-like effect as residents who used the service must access it in a neighbouring community, often a larger centre. Residents will bundle their trips, taking advantage of being close to other services and shops while outside the community. . .weakening other local businesses.”

A graduate of Dalhousie’s Masters of Environmental Studies program, MacMichael sees the inter-generational transfer of businesses ownership as a huge opportunity for young adults who want to live in rural communities.

“They may desire that quality of life, but employment is a big barrier,” said MacMichael, who hails from the small village of Debert.

“They aren’t necessarily looking to make it rich, but they want to be able to live well and do something they’re passionate about. That could be running the same businesses that’s been there for years, but approaching it a little bit differently.”