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Business Planning: An Entrepreneur's Key Success [Planning] Tool

By: Annie Boivin
May 2011

entrepreneur key success tool

If you are concerned with ensuring the continuity of your business, preserving your employees’ jobs, maximizing your retirement income, protecting your company’s heritage, and providing for your family’s and your partners’ financial security, then you must take the time to plan for the succession of your business. The sooner you start, the more options, strategies, and successors you will have to choose from.

Each case is different, so proper planning allows you to find a customized solution that will ensure the continuity of your business and protect your assets.


A business succession plan has financial, legal, tax, personal and individual consequences and entrepreneur key success toolcan be done either by transfer of ownership (asset transfer) or by transfer of leadership (knowledge transfer).

Ownership transfers are somewhat more technical and will depend on the type of succession chosen. They are also subjected to the vagaries of the Income Tax Act. Successors can be family members, employees, or third parties. Generally, when the successors are family members, estate freezing techniques are used as they allow family members to enter in the business with little or no investment and they stipulate amounts to be paid to the retiring owner, providing him or her, among other things, with an adequate retirement income flow. Alternatively, when the successors are key employees, strategies commonly used allow for the purchase of the business to be financed through the use of its profits, as well as borrowings. Finally, if the successor is a third party, you will need to weigh the pros and cons of selling either your assets or your shares.

One thing is certain, whether or not you are ready to pass on the reigns, it’s important to put in place a corporate structure that will allow you the flexibility to reduce taxes if ever you do receive an offer for the business. Certain tax measures allow for a business owner selling a business to receive tax savings of up to $180,000, but only if planned properly!

An effective business succession plan will allow you to maximize the use of available tax benefits, remain competitive and maximize your after-tax proceeds for your business.

Because succession often coincides with retirement, planning for the succession of your business will provide you with retirement income and will allow you to foresee the financial and tax implications upon your death. This will make it easier to plan for the use of your wealth during your retirement and for its transfer. A shareholder agreement, a buy-sell agreement, or strategies with life insurance will help to protect your family and allow the business to continue running smoothly.

Retiring In Drives

When planning for the succession of your business, take the time to plan for the retirement or succession of your employees. If your employees are retiring in droves and their replacement is not assured, the value of your business may suffer as a result. Several financial tools ‒ such as RRSPs, pension plans, employee stock options, and group insurance plans ‒ can help you preserve your human capital.

As an entrepreneur, you are at the core of economic development, creating both jobs and wealth. Don’t let unexpected illness or sudden death send your accomplishments up in smoke on account of poor planning.

Annie Boivin, BBA, Fin.Pl, D.Tax, TEP, is manager, wealth and estate planning at Richardson GMP (

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