The simple answer is YES! Succession is a word that is often used, but what does it really mean? A complex and confusing topic, it lingers as the unspoken part of business planning, too large to tackle, genuinely the elephant in the room.
It is difficult for many business owners to think about passing the torch to the next generation. Fuelled by the fear that no one can run the business quite like them, they drag their feet afraid to transition the business. Meanwhile the eager successor wants to reward the owner with a relaxing retirement and can’t wait to take the reins. However, the longer succession remains ignored the more options disappear. With baby boomers now in their late 50’s to early 70’s, there will be a surge of Canadian’s looking to exit the workforce whether a plan is ready or not.
Are you a business owner who is five years away from wanting to retire?
You should be starting to plan your exit now! Planning now will allow you adequate time to create a plan for a tax efficient succession while ensuring the next generation gains adequate training and experience to successfully run the business. It is important to create a plan that makes you, your family and your key employees happy.
Are you a business owner with a young family and 10+ years before retirement?
Then you may want to consider setting your business up for a cost efficient succession in the future. Planning early can create tax efficient strategies for you today and for your future retirement while reducing the stress of passing the torch down the road. Such planning focuses on flexibility while keeping tax efficient options available.
Are you building your career and looking to start or purchase a business?
You should be thinking about how to position yourself to benefit from the wave of retiring baby boomers in the near future. The influx of baby boomer retirements will mean increased opportunity for those looking to become an entrepreneur.
So when should you start to plan? The simple answer – if you are a business owner, it is never too early to plan to ensure your business is your legacy. After working hard to build and maintain a successful business, you deserve to access the most funds possible from that business when you retire. For that to happen, you must have a succession plan in place to ensure a tax efficient transition of your business. However, your goals and financial needs over your retirement and wishes regarding who will take the torch may trigger a different answer than based solely on tax efficiency.