2024 April Update

It’s been a hectic start to tax season, with the bare trust filing requirements and subsequent withdrawal of those requirements. A lot of people were confused, and then annoyed. Further annoyances were developed over the carbon tax updates. Don’t forget to hug your accountant (if they like that sort of thing), and remember to file your income taxes on time.

As you’ll see in the Spring in the news section of this month’s newsletter, Julia has been busy writing articles, speaking on podcasts (to be aired soon) and webinars, interviewing with the Globe & Mail, defending the Financial Planner title, and even providing technical editing for a new book on funding your startup. Not to worry – she’s been working on all your planning at the same time!

Over the past few years, many of our clients have been getting more and more serious about exiting their businesses. We like to remind those who tell us they have no plans to ever exit their businesses: there is going to be an exit, one way or another. You’re not going to work forever… because you’re not going to live forever.

There are a lot of technical aspects to exiting your business, and your unique situation requires careful, studious thought. On a general level, we wanted to share a few key thoughts:

IF you want to sell your business in the future…

Focus on turning it into a business that runs without you. If the business only operates because YOU are there, then it’s potentially a great career, but not necessarily a saleable business. Some keys to self-managing business include:

• Process, process, process. Written, regularly reviewed, and easy for any person to walk in and understand.
• Succession and continuity practices for every single role in your business. Having great people absolutely is a selling feature, but people move and change. The roles you create should be ones that another similar great person could take over.
• Excessively clean books. Your finances should be easy to understand, easy to operate, and receive a clean bill of health from your tax authority. No one wants to take on a liability of any kind.
• Clear corporate structures, ownership, and legal documentation such as a shareholder agreement.
• Great historical records, on your finances, employees, customers, vendors and strategic partners. What have you encountered? How do you work with them? What opportunities and risks exist? Are these relationships transferable?
• Fabulous cash flow and profits. You might have great top-line revenue numbers, but what is leftover at the end? A business with steady and ongoing profits is not only saleable, but will snag you a great price.
• A strong and potentially growing market. Where does your business come from? How do you maintain it?
• If you have partners, it’s incredibly important that you are on the same page about the direction of the firm. Don’t assume it. Start talking.

If you’re steps away from this, working with a professional management consulting and/or strategic planning firm can really make a difference.

IF you are ready to sell your business…

Assuming you’ve got a really fabulous business to sell, here are some things we would love you to think about:

• Getting a business valuation and assessment can help you understand if there is a market for your business, and what that market might pay.
• Before getting excited about a potential price, remember that it’s important to understand whether that price is what you need to get what you want. Your financial plan should help you wrap your mind around what would actually make sense for you and the dreams you have in your life.
• Before putting yourself out on the market, and we mean at least (hopefully) two years before, it’s important to review your structure to ensure that you’re well set up for a tax-efficient sale, maximizing the amount you get to take home. Your financial plan and your excellent tax accountant or tax lawyer can help ensure you’re in good shape.

If you find that there is a gap between the potential sales price and what you need, it’s worth then determining whether your next step is to dig in and build your business up to the sale price you want, or whether you would be willing to take that price and solve the gap in another way. Other ways could include consulting, starting another business, or even taking on – shudder – a JOB.

IF you want to pass your business on to your family members…

There’s a lot to unpack here. A lot. The tips around preparing your business for sale are of course still relevant, because a good business to pass on is a good business overall.

The family component starts with conversations, family meetings, and strategic planning. At Spring, we collaborate with the team at Trella Advisory Services to help families through this important transition.

IF your business ends with you…

Then a strategy is still required! Your business is absolutely a valuable and viable business if it’s one that doesn’t run without you. Let’s structure it and all your next steps so it’s feeding your dreams, and you can wind it down in a way that is graceful and tax-efficient. Even if you plan to work until the day you die, there is a day after that. People you serve, and people you love will be impacted in so many ways. Let’s take care of you, and them, in your plan.

Your Spring Planning Team

Practice Notes:

New Software: Spring will be testing some new financial planning software in the coming months, as it is our goal to remain effective and technologically powerful in all the ways we serve you. If we are testing this software in some of the work we are doing with you, we will let you know!

Julia will be working on eastern time from Florida the week of April 22-26 (for fun!).

Julia will be all over the place in May, including Kelowna for meetings, Las Vegas for fun, and Calgary for the Family Enterprise Canada Symposium, where she will be one of the two emcees. Our offices will be closed on Monday, May 20th in observance of the Victoria Day statutory holiday.

Spring in the News:

Funding a New Business for Dummies – Julia gets to add “technical editor” to her resume on release of this new book, written by Marc Butler and Eric Butow. You can find it on Amazon here.

Women & Investing: Julia joined experts in investing and law to talk about the specific concerns for women when it comes to finances. You can watch that video right here.

Housing Credits & Rebates: The Globe and Mail asked Julia to share her thoughts on a variety of credits and rebates available for home owners in Canada. Read the full article here.

The Family Cottage: Julia was recently asked to provide some content for a new site called FP Collective, which intends to provide financial planning content direct from some of Canada’s top voices. You can read her article on how to transition the family cottage (or cabin) right here.

Financial Planner Title Regulation in Ontario: As President of the Financial Planning Association of Canada, Julia co-signed a joint statement with advocates across the country to speak out against a credential recently approved by Ontario’s FSRA as part of their titling legislation. Ontario is one of the few provinces that has protection on the use of the title “Financial Planner”. As Ontario tends to lead the way in regulation, it’s important that the title is not watered down while they work through their legislation. You can read the news release from FPAC here.

Please check out our media page here for videos, podcasts, interviews and more.

Planning News Digest:

• Canada’s Carbon Tax Explained: There was a lot of concern over the carbon tax throughout the month of April. Our friend Preet Banerjee gives an outstanding explanation of how it works in this short video.
• The Roots of the GameStop Short Squeeze: If you’ve seen the movie “Dumb Money” you might be aware of the whole GameStop Short Squeeze story. Our friend, Dr. Brooke Struck, wrote a great article about what was happening while it was happening back in 2021. Read the full article here.
• The Chief Learning Officer in Families: As families grow and continue to develop their wealth together, the important role of Chief Learning Officer helps strengthen the family’s human, intellectual, social, financial and spiritual capital. Read more about the emergence of this role here.

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