The building blocks of business owner planning

No matter the products, services or industry, small businesses are an engine of our economy and represent the large majority of businesses that exist across Canada. If you look at the most recent Government of Canada statistics, there are about 1.2 million employer businesses, and almost 98 percent of these are classified as small enterprises (i.e., have 1 to 99 paid employees).

Beyond the overall numbers side of it, though, I think it’s important to take a step back and recognize that behind every single one of these businesses is an owner and his or her family; a great deal of time, effort and dedication; employees; and resources and supports that help make it all possible. There are so many things that play a part in whether or not a business becomes or remains successful, and for owners, all of this exists alongside their own personal and family financial goals and objectives as well.

The experience and journey of owning a business can be quite the mix of excitement, challenge and sometimes overwhelm, and this is where proper planning can offer value by addressing and balancing both the broader and more unique aspects that apply to your business and to your individual situation.

Over the entire life cycle of a business, I think there are some key planning elements that every business owner needs to carefully consider and implement. First is a detailed, flexible business plan. Whether you’re a new entrepreneur or your business is already established or mature, a business plan should function as an overall road map—and the more details you include, the better. And while a business plan may generally carry more weight in the start-up or early phases of a business, I think it should also exist as a living, breathing plan that you revisit and refer to over time. A solid business plan should incorporate not only where the business is today and where it’s aimed to be down the road, but also includes room to shift or pivot as the business matures and encounters factors that may impact it or you as the business owner. Using it as an ongoing tool in this way will help ensure the business remains flexible and that you can adapt to any changes or events that may take place.

Next is having an exit plan. Regardless of where you’re at with your business, it’s never too early to start thinking about—and taking action to prepare—your exit strategy. I think a lot of business owners tend to view their business as something they’re going to do forever, and when you combine that with the day-to-day demands of running a business, giving proper thought to how you’ll ultimately exit is something that often falls through the cracks. Plain and simple, your business is going to transition at some point, so having a plan (and the right plan) that supports that transition is key.

For business owners, thinking ahead to retirement needs to be about retirement savings and about effectively exiting the business in the most advantageous way possible, whether that’s through a sale or transfer to a family member or management team, for example. Many owners make the general assumption that selling their business will ultimately fund their retirement, but there are a number of things that may impact the sale of a business, and this is where (regardless of your specific exit strategy) being proactive in setting aside separate retirement savings can be very important.

Contingency planning is another key consideration. As a business owner, you never know what could take you, or perhaps a partner or key employee, away from the business, and in certain circumstances may result in an involuntary exit from the business. Of course, nobody ever wants something like a serious illness, marital disruption or death to happen, but life can be unexpected, and proper planning can help in safeguarding all you’ve worked to achieve. Here, it becomes important to look at options such as different forms of insurance, business continuity planning, partnership agreements, a Power of Attorney and Will, and how these can help protect you, your family and your business.

Over and above these main considerations, I think as a business owner, you also just want to make sure you’re keeping your options open as it relates to the planning that’s available to you. For example, some options only become possible at certain points, like an Individual Pension Plan, which is more relevant for those over the age of 40 and have T4 income. Or in a situation when you have tax considerations, you may want to explore the potential role of charitable giving in minimizing tax. Given the unique circumstances and timelines each business owner experiences, this is where the benefits of working with qualified professionals really come to light, as they provide expertise in taking a holistic view of your circumstances and then implementing the opportunities that make the most sense.

One of the best parts of the work we do is being able to solve some of the issues or challenges business owners may face, while at the same time fitting together all of the planning pieces in the most effective way possible. When we help families put the right processes in place, whether that’s related to estate and business succession planning, or minimizing the impact of tax, or planning to provide for their desired retirement, it’s truly gratifying to see the positive impact and peace of mind that effective planning can create.

If you’re a business owner and you’re interested in reading more, please check out our Perspectives magazine Business Owner Special Edition and see how our approach can help through the eyes of our clients.