Your Money: Business succession planning
By Medicine Hat News on April 21, 2018.
According to a Canadian Federation of Independent Businesses survey, 65 per cent of small and medium sized business owners have no business succession plan. The main reason cited for not engaging in business succession planning is that it is too early to plan for succession. While there may be some elements of business succession planning that are less urgent than others, it is never too early to start planning an exit strategy if you want to maximize the future benefits from your business, or to have an appropriate contingency plan in place in the event of an unexpected disability or death. What is business succession planning? Before understanding why all business owners should consider business succession planning, it is important to understand that business succession planning is in fact a subset of your overall wealth planning. When choosing the right advisor to work with, such as a certified financial planner (CFP), which will then adopt a comprehensive and integrated approach to wealth management- including business planning. Business succession planning is one of those considerations when building a proper wealth management plan. In my experience, business owners have unique needs and we recognize that when speaking with them about their business. An important part of understanding business owners is being able to provide those in-depth comprehensive wealth solutions. Business succession planning is a process that involves: Business planning; management and business ownership transition planning; tax planning; estate planning and financial planning. Every individual will benefit from discussing wealth management considerations such as financial planning, tax planning and estate planning. A business owner needs to consider these same factors, however they must be aligned with the goals of the business as well. If you, as a business owner, address business succession planning today, you may be able to achieve some of the following benefits: Protecting the current value of your business; increasing the value of your business; minimizing taxes; establishing financial security for you and your family; and providing security for the future of the business. Additionally there are some steps to consider in the business planing process. Step one is normally the initial discussion of understanding you, the business owner. The process begins with a discussion to learn about you and your business. Listening and understand how your business started, how you got it to where it is today, and then help you get the business and yourself to where you would like to be. Step two is summarizing your business succession planning considerations. To commence the process you can use the experience and knowledge of a professional team to identify your business succession planning considerations. If the process has already been started, then you need to focus on areas that you may not yet have considered. Step three is choosing to work with other professionals to identify appropriate solutions. A CFP will help facilitate meetings and work with professionals who can provide general information, technical advice and help implement the plan. These professionals may include existing advisors and/or new specialized advisors that you may require. Some potential business succession planning professionals may include: Insurance-estate planning advisors, portfolio managers, accountants, lawyers, business bankers such as small business advisors or commercial bankers. Other parties that may be involved in these meetings could be senior management or other members of the business owner’s family. Step four is to ensure solutions are integrated with your overall wealth considerations. Staying involved as the appropriate business succession planning solutions are implemented and ensure that they are integrated into your overall wealth planning is very important. Finally, step five is a regular and periodic follow-up to monitor your business plan. For a further discussion around your business planning strategies, please contact me, Neil Mardian, CFP, FSCI, CIM, M.Sc. (Mgmt) (403) 504-3026 (_neil.mardian@td.com-11
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