Planning for the unexpected
Published in the December 2018/January 2019 issue of the OCA Construction Comment.
By Anne Van Delst, CPA, CA, LPA, Partner
Life can be unpredictable. If you’re a business owner, strategic planning is a necessary part of ensuring your continued success. You want to be the one guiding where the company is going and setting the direction for the future.
Part of that planning involves having a succession plan in place so that if you become incapacitated or die unexpectedly, your loved ones are taken care of.
Without a plan:
- Your family could be faced with an unnecessarily large tax bill.
- Your business, into which you poured your heart and soul, will struggle.
- Your vision of what you wanted your business to become could be lost in a fog of confusion and dispute.
We buy life insurance and health insurance to counter the unexpected. Creating a strategic plan that incorporates business succession is no different.
Leaving a business in the most favourable tax situation is common sense, but while tax and other financial considerations are important, succession plans deal with who will run your business.
More important, they prevent those you leave behind from suffering unnecessary stress and uncertainty at a time of grief and emotional upheaval.
Most business owners also have groups of employees that they care deeply about. They want to ensure those employees continue to work in a company that is financially sound and maintains its workplace culture.
You are the best person to dictate the direction for the future. Should someone in the family take over the business? Should it be one of your key employees, or will the business be sold to a third party?
A succession plan can be difficult but conversations are essential with your family as part of the process of preparing a succession plan.
For example, which of your children should take over the company when you are out of the picture? Perhaps it’s the youngest. Some adult children have an interest in the family business and some don’t. Some have an interest but don’t articulate it. Some siblings don’t get along. Some people are simply better than others at business. Not having the conversations, can harm family dynamics in the future.
We advise business owners to work with specialists who ask the right questions, who can maximize tax efficiency in this ever-changing world of rules and regulations, and who understand that planning is as much about people as it is about finances.
At GGFL, we listen, advise and provide the tools necessary to help plan so if the unexpected does happen, the path forward is clear.
Business doesn’t exist in a vacuum. Change is constant and succession plans drawn up today can be changed tomorrow. They are not cast in stone.
Once you have a plan, ensure everyone is aware of it, and then you are for prepared for the unexpected.
A successful business begins with a dream. Why risk having it end in a nightmare?