A Third of Canadian Small Business Owners Could Retire Tomorrow - But Aren't

American Express Small Business Monitor finds 70% of owners see role in their business after retirement

MARKHAM, ON, Sept. 29 /CNW/ - Half of Canadian small business owners wish they could retire tomorrow, and almost a third have everything in place to do so, according to the quarterly American Express Canada Small Business Monitor. But small business owners don't see "retirement" as the end of their working lives: 70 per cent of respondents say they will still have a role in their business after retirement, some because they just love what they do, and others because their business is a key source of income.

About 30 per cent of small business owners (SBOs) plan to maintain an ownership interest in their business during "retirement", while another 41 per cent plan to work part-time according to the survey, conducted by Angus Reid Public Opinion. The results suggest that SBOs define retirement differently from popular retirement notions.

"We know that SBOs see work differently than others," said Eric Nielsen, Vice President & General Manager, Small Business Services Canada, American Express Canada. "Owning a small business isn't just about the money - it's a lifestyle choice, and being a small business owner is part of how many define themselves and their lives."

The Older They Get, the Longer SBOs Expect to Work

While the average retirement age for all Canadians is 62, about a third (34%) of SBO respondents said they expect to retire after the age of 65, while another eight per cent don't expect to retire at all. 40 per cent plan to retire between the ages of 60 and 65, while 17 per cent plan to retire before age 60.

But as SBOs get older, their outlook on retirement changes. More than two-thirds (67%) of respondents between 18 and 34 expect to retire before 60. This group of younger SBOs see themselves retiring early and spending time with their families and volunteering or travelling while still physically well. For those aged 55 or older, more than half (54%) expect to be at least 65 when they retire. In the survey, those planning to retire after the age of 65 were divided among those (51%) who want to work as long as they can because they love what they do, and those who cite finances as a motivator (39%).

One respondent who owns a marketing company said that although they had to cash in an RRSP for personal reasons, they are not too worried. They love what they do so much that they can't foresee wanting to retire. Another respondent said their dad worked until he was 83 and expects they'll do much the same, working for as long as it's fun - even though they are disciplined savers.

40% of SBOs Say Recession Delayed Retirement

Although half of respondents wish they could retire tomorrow, less than half (48%) have savings, such as an RRSP, that could help them finance that retirement. Less than a quarter (22%) of respondents actually have a formal retirement plan in place, a number that doesn't change as respondents age.

And while many want to stay involved in their business because they love what they do, 40 per cent of respondent SBOs said they have been forced to delay their retirement due to the recession. Respondents cited declines in their RRSPs that would fund some of their retirement and the need to pour extra funds into their business during the recession, both exacerbated by a slower economy that is making it difficult to rebuild savings. One Montreal respondent said they expect it will take several years for their business to fully recover from the downturn; fortunately, they are in no hurry to retire, having started his business just two years ago, relatively late in life.

And SBOs are at least in part relying on their businesses to be healthy in order to fund their retirement:

    
    -   30 per cent are expecting to fund their retirement at least in part
        from profits from their ongoing business

    -   27 per cent are planning to sell their business to fund their
        retirement
    

"In many cases, SBOs' businesses are their retirement plans, so it's not surprising that some will have to delay their retirement because of the downturn," Nielsen said. "What's encouraging is that more than half (54%) expect that they will still retire in a better financial position than their friends who don't own businesses."

Small Business Index Falls for First Time Since Measurement Began in March 2009

The American Express Small Business Index fell two points to 64 per cent or "C" in August from 66 per cent in May 2010. Although the movement is small, it's the first time that the Index, which measures and assigns a letter grade to the confidence, performance and attitudes of Canadian small business owners, has fallen since it was developed in March 2009.

The Index for the three largest cities was:

    
    -   Vancouver at 64 per cent
    -   Toronto at 63 per cent
    -   Montreal at 57 per cent
    

The drop in the Index reflects declines in all of its component parts:

    
    -   42 per cent of SBOs report a drop in business over the summer (an
        increase of five points since May)

    -   31 per cent of respondents are worried that their future financial
        position will get worse (an increase of five points since May)

    -   24 per cent say they are concerned their business may contract or
        that bankruptcy is a real possibility in the next six months (an
        increase of six points since May)
    

The changes to these individual measures, although consistent in their direction are relatively small, and more than three-quarters (76%) of Canadian small business owners are "very" or "somewhat" confident that their business will grow in the next six months.

"There has been much talk in the news about a double-dip recession, and at first glance the drop in the index and its components seem to support that theory," Nielsen said. "But none of the individual movements are large enough to cause grave concern, particularly given that business typically slows somewhat over the summer. The next quarter, which will measure conditions in the lead up to the holidays, should be telling."

About the American Express Small Business Monitor

From August 11 to 19, 2010, Angus Reid Public Opinion conducted an online survey on behalf of American Express Small Business Services among a randomly selected, representative sample of 555 Canadian small business owners who currently have two to 100 employees. Sample sizes in major markets include: Toronto (100 completes), Vancouver (81 completes), and Montreal (39 completes).

The margin of error for the total sample is +/- 4.2%, 19 times out of 20. The results have been statistically weighted according to the Statistics Canada Business Register's most current business size and region data to ensure a representative sample of the entire population of small business owners in Canada. Discrepancies in or between totals are due to rounding.

About American Express Small Business Services

American Express Small Business Services (SBS) is dedicated exclusively to the success of small business owners and their companies. SBS supports business owners with exceptional service. With tailored products and services, the team delivers purchasing power, flexibility, control and rewards to help customers run their business. Specifically, business owners can leverage an enhanced set of products, tools, services and savings, including charge and credit cards, robust online account management capabilities and savings on business services from an expanded lineup of partners. To obtain more information about SBS visit www.americanexpress.ca/smallbusiness.

About American Express in Canada

American Express in Canada operates as Amex Bank of Canada and Amex Canada Inc. Both are wholly owned subsidiaries of the New York based American Express Travel Related Services Company, Inc., the largest operating unit of the American Express Company. Amex Bank of Canada is the issuer of American Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel, Travel Services Network and Travellers Cheques divisions in Canada. American Express opened its first offices in Toronto and Hamilton in 1853 and now employs 3,700 Canadians coast-to-coast.

For further information: or a full copy of the report, please contact: Edelman, Tom Sargent, [email protected], [phone]; or American Express Canada, Jessica Myers, [email protected], [phone]