Your business is a unique asset that will change over time. In fact, it can be both an asset and a liability in regards to financial security. There are risks and opportunities to consider with each stage of business development. In the survival stage, the business is new and/or small. Paying off business debts or recovering invested capital may be the only pertinent business-related issue. However, during this stage, the business owner should ensure that income would continue if they were unable to work for a time as well as protecting dependents in the event of premature death.

While you may want to retain earnings in the business, accumulating creditor-protected savings outside the business is important.

Risk management Retirement Planning Other Goals
Premature death Registered plans Home purchase
Disability Asset allocation Children’s Education
Critical Illness    
Long term care    

In the growth stage, while reviewing and updating your financial plans, the key issues become business continuation and succession. Both require an ongoing process and regular planning to take into account the fast changing needs of your business. Due to the rapid growth of the business, it is not unusual to see a significant increase in protection.

If you are generating new income and have assets to invest, you want to invest effectively, keeping tax costs to a minimum. It may be time to set up a holding company for assets not required to operate the business. This can also be an opportunity to crystallize the $500,000 enhanced capital gains exemption.

Potential loss of key persons also creates a need for protection.

If there is more than one owner, the shareholder’s agreement should be reviewed and funding arranged for the buy-sell portion.

You may have an increased need to accumulate creditor-protected savings to counter-act business debt.

Attracting and retaining employees through benefits programs or other measure may also become important. To retain key executives or to create a pool of retirement capital for the owner, there are tax-effective supplemental retirement income strategies.

During the later portion of this stage, you will have to begin to plan for your retirement and how your business asset can play a role in providing you with a retirement income.

Business Continuation

Key Person Protection Buy-Sell Agreement Retirement Business Loans Executive Benefits
Premature death Premature death Critical illness Collateral Insurance Retirement
Disability Disability Retirement   Compensation
Critical illness   Long Term Care   Arrangement
Long Term Care       Shared Benefit or  Shared Ownership

Business Succession

Ownership Transition Management Transition Retirement Income Planning
Sell, liquidate or transfer Financing Asset allocation
Successor training   Share redemption
Buy-Sell plan/fund    

A succession plan may already be underway when the business reaches the maturity stage. As always, your personal security should be considered. You need exit strategies in the event of retirement. The tax cost of passing on the business and other estate planning issues become a genuine concern. The possible distribution of your estate needs careful planning.

Will planning Powers of Attorney Tax planning Trust planning Family trusts Philanthropy Planned gifts
Equalization Property Estate Freeze Family trusts Planned gifts
Liquidity Personal care   Spousal trusts Insured gifts
Family law     Self-settled trusts  

Through various types of insurance there is a personalized and affordable solution for every stage or need.