Five Steps To Succession Planning

Let’s face it, Canadian Entrepreneurs avoid succession planning. It is like Estate Planning for your business, yet similar to a will, it is often human nature to avoid planning for transitions. If not addressed, your legacy is in jeopardy. Once of the most effective ways to build a succession plan is through an advisory board. A family business adds an additional layer of interpersonal dynamics to succession. The Business Development Bank of Canada (BDC) offers a rich set of tools and tips.

Where do you begin your succession plan?

Roles and responsibilities is a good place to start. Your business is likely successful because you and your team are working full out to ensure its sustainability. As the business environment evolves, your roles may change and the future skills for leadership may need to match. Beyond the functional roles you will likely need to determine how much is your business worth? To establish a realistic value for your business and discover the most common method used to determine a fair sale price often requires professionals and advisors. How will the transition be financed? What constitutes a good financing package depends upon your business structure and needs. There are typically 5 main sources of financing. Enjoy the Global Family Office that offers a detailed perspective on family business transition.

As an entrepreneurial firm, our Hampton Advisors regularly assist entrepreneurs in this process. Let us know how we can help?

Selling Family-Owned Businesses

Selling a private family-owned business is an exciting and a trying business. The challenge to transition a family business or wealth created from it to the next generation is significant. As Forbes states “Less than one third of family businesses survive the transition from first to second generation ownership. Another 50% don’t survive the transition from second to third generation.”

Approximately 80% of all businesses in Canada are family-owned. Family-owned businesses are responsible for about 60% of Canada’s GDP per year. In the United States, family businesses generate over 50% of the US Gross National Product (GNP). Therefore you are likely working for a family business or you are in the family business! Hampton Securities advises and guides entrepreneurs on building their businesses, assisting in their financing needs and counselling owners through the exit strategies. This can include generational wealth transfer, estate planning, business valuations and financing.

To consider the challenges and the process of selling a family business enjoy this two part series from Wealth Management.com.

Entrepreneurs: Have the “Money Talk”

Time to have the “Money Talk”. Financial and Tax Planning are common catalysts in the first quarter of each year, regardless of when you file your taxes. Our Advisors at Hampton Securities would recommend entrepreneurs take it a step further. It is an ideal time to have the “Money Talk” with family and partners to safeguard your Estate Plans and confirm they are up-to-date. While it begins with a Will, it is not a ‘one and done’ process.

Your Estate and Business Succession Plan is Dynamic

There have been significant changes to Estate Law in the last Federal Budget. Implications of an aging population and prevalent challenges around the legal treatment of mental competency create a common sense need for succession planning. We suggest it is an opportune time to take a fresh look at your Estate Plans. The upcoming Federal Budget on March 22, 2017 will offer another strong incentive to review your business Succession and Estate Planning needs.

Your Will and the Estate Plan that surrounds it, is like you and your family – it is dynamic. In addition, there is new legislation that may impact your Estate Plan, such as the treatment and record keeping requirements for your principle residence. Also consider your health care directives, formerly living wills, need to be updated to be effective with recent changes. In both cases, there are new requirements that business owners and their families need to be aware of.  Ensure your business is anchored to a proactive estate plan. We encourage you to contact your Hampton Securities Advisor or call us at 1-877-225-0229 to help you have the “Money Talk”.