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Succeed with Succession

     Bill was the owner-manager of a small IT company in Manitoba.  He loved owning his own business but was worried about the long-term future of the company and wanted to focus more on his technical skills and less on running the business.  He approached the largest competitor in his area and they entered into a “handshake deal” for the competitor to buy his company based on a rough valuation that Bill provided.  Bill started working for the IT company and as six months went by, they became all too busy to have Bill’s business formally valued, draw up documentation or purchase insurance.  Unfortunately, Bill passed away before any of this could happen.  He left a wife and two young children, little insurance, and financial records of his small company that were a mess.  The IT company ended up paying Bill’s widow a nominal amount for his client contacts but likely much less than the contacts were worth and the process took much longer than it would have with a planned agreement in place. 


Unfortunately, this scenario is likely to play out again as more business owners get closer to the sale of their businesses and retirement.  According to the Canadian Federation of Independent Business, 77% of small business owners plan to sell their business in the next 10 years.  Only 9% of small businesses have a formal succession plan; 40% have an informal plan.  That leaves a staggering 51% with no plan at all.


As there are currently 1.14 million small businesses in Canada, this provides a great opportunity for financial advisors to play a key role in helping business owners create and implement a formal succession plan.  It’s critical to have a process in place to help business owners.


The following outlines the steps required to grow your brand as a specialist for small business succession:

Get Your Own Plan in Place – unfortunately, most financial advisors do not have their own succession plan in place!  This can be one of the most powerful steps to build your own expertise in small business succession.  By modelling this process for your clients, you can show your leadership, expertise and share the experience with your clients and potential business owner clients.​


  1. Build Your Expertise – you may already be an expert in small business succession.  If so, skip to step 3.  Most advisors we work with need to develop some additional skills to work successfully in this area.  Luckily, there are many resources to help.  Many insurance companies and MGA’s have programs in place to help develop these skills.  Pursuing designations such as the Certified Financial Planner (CFP) and Chartered Life Underwriter (CLU) will help build your credibility as a business expert as well.
  2. Get Feedback – either in a focus group or in one-on-one client interviews, ask your current business owner clients.  If you have business owner clients, this is a great way to approach them by inviting them to participate in your research.  Here are some questions to get you started:
    • Do you have a formal succession plan for your business?
    • If not, why haven't you put one in place?
    • What are the biggest challenges you face in creating a succession plan
    • What are the best opportunities to sell your business?
    • What help or resources do you need to put a succession plan in place?This research can help better design your offering around the actual challenges business owners face and also builds your credibility
  3. Build your team – many professionals are involved in the creation and implementation of a succession plan.  We have seen the most successful advisors in this area have their own resources and alliances and they also work with the business owners’ existing team if they have one in place.  Some examples of other professionals are accountants, lawyers, business valuators, business consultants, advanced planning specialists, group benefits specialists and mediators.  A successful advisor who works with farm succession clients brought in a specialist on farm succession planning and had a joint workshop with a local accounting firm and a law firm.
  4. Define your process – do you have your process for business succession clearly defined in a step-by-step manner that can easily be communicated to clients?  Having this makes it much easier to begin the conversation and outline the expectations to make it less daunting. Another advisor we work with has a 6-step process that is similar to the CFP Financial Planning Process except one of her steps is to have a family meeting about the business.
    • Another advisor who specializes in the business owner market describes the second step of his process as “meet your team.”  A key part of your process should be to review the business structure of the company or companies. Another successful advisor in this area does a diagram of the corporate structure for clients and it is surprising how many times the structure is not set up in the best way for the business owner.
  5. Communicate your Business Planning Services – clients and potential clients may not be aware that you offer this type of planning.  It is important to let people know through client case studies, client stories, your marketing material, your website and social media as well as educational events. 
  6. Start the conversation – most experts suggest starting the succession planning conversation 3 to 5 years before the owner is thinking of selling the business.  The best way to do this is to help the business owner get clear in their own mind about their vision for the future.  See above for the questions under step 3 for ideas on how to start.  Here are a few more:
    • Tell me about your business.
    • What is your biggest concern about your business?
    • Why are you thinking of selling?
    • Are you thinking of working part-time or fully exiting the business?
    • Will you have enough money to retire?
    • Do you have a buyer in mind?

Help them build their vision for their life and their business – many times even the spouses haven’t had this important conversation.  The financial advisor can be an important factor in helping clients get clear on where they want to go in their life, business, retirement and eventually how they want to leave a legacy for their family. 


Some great questions to get started are:

  • Where do you see yourself and your family in the next 3 to 5 years?
  • If money were not an issue, what would your ideal lifestyle be?
  • What impact would you like your estate to have after you are gone?
  • What steps have you taken toward your retirement goals?
  • What do you see yourself doing in retirement?

Help them put a contingency plan in place for the short term – a necessary part of the conversation is covering the immediate risks of premature death or disability as outlined in Bill’s story.  Is there key person insurance in place?  What about office overhead insurance?


Some great resources in this area are:


Every Family’s Business by Tom Deans


The Business Transition Crisis by Wayne Vanwyck


The Exit Map by John Dini


Family Enterprise Xchange


For more checklists and ideas, please contact

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