Many business owners are not prepared to hand over the reigns of their enterprise to a successor, a new study has found.

Only 19 per cent of current business owners have named someone to take over their company after they leave; furthermore, only about 33 per cent have a plan of transition in place, according to a BMO Bank of Montreal study conducted by Harris/Decima.

While this may not seem like cause for concern, note that 56 per cent of businesses believe they are in the later stages of their business. Of these 79 per cent have not named a successor, with many claiming it is too early to do so.

"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," said Sean Foran, Vice President of Succession Planning at BMO Harris Private Banking.

Speaking of passing the business on to a family member, 40 per cent of those surveyed said they wanted to sell their business to an outside party while only 17 per cent were willing to sell to a family member. Interestingly, 25 per cent said they have no interested family members, with 17 per cent saying that there is no one in the family that could take over for them.

In a sign of the times, 85 per cent of those surveyed said that they are the first or second generation of their family to run the business. Furthermore, most business owners do not want to think about leaving and try to put it off as late as possible.

"These findings reflect the mindset of a typical entrepreneur," said Gail Cocker, Senior Vice President, Commercial Banking, BMO Bank of Montreal. "Most business owners are so focused on growing and maintaining their business they find it difficult and even emotionally draining to contemplate selling or winding it down."

For those who are prepared to move away from their business, 66 per cent will invest the money or fund their retirement with the money.

"Clearly some entrepreneurs are concerned the sale of their business will not sufficiently subsidize their retirement lifestyle," said Foran.

In what can be described as the light at the end of the tunnel, 75 per cent of businesses are five year or more away from changing ownership.

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