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I’m running my own business and I need smart business moves… for me
> Deal with personal illness and disability
Nobody plans to get sick, but accidents, illnesses and disabilities happen every day. When you own a business, life and health insurance can be used to give you an extra layer of financial protection. That way, your family, your partners and your company will be protected if you ever are unable to work.
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> Protect your home and savings
As the owner of the business, your personal assets could be in jeopardy if it fails or falters. While risk may be part of every business venture, there are things you can do to reduce its effects.
Start while your business is healthy and develop a strategy to protect your personal wealth from business creditors. Your advisor can suggest investment and insurance products to help guard against unforeseen circumstances and preserve your personal and family assets if the business falls on
tough times.
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tough times.
> Create a personal financial plan
What gets planned, gets done. Having a personal financial plan that fits with your business goals is a smart move. Whether you’re trying to build your wealth, reduce your debt, or protect the things you’ve worked so hard to get, a qualified financial advisor can help you plan for the future and reach your financial goals.
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Connect with your advisor. He or she might suggest you begin with the end in mind – by asking about your long-term business goals and estate plans. There are many insurance and wealth management products that can be used to help preserve your estate, keep your legacy intact, and ultimately distribute your wealth according to your wishes. From there, the discussion might focus on determining the right type of insurance for you, how much coverage you need at this point in time, how much you can afford to purchase and finding the right company to deal with.
I’m running my own business and I need smart business moves… for me and my business partner
> Keep the business even if you and your business partner part ways
Your business partner may decide to leave the company or sadly, your partner may die. Estate and tax planning are complex subjects at the best of times, and the complexities only increase when you own a business and have business partners.
You and your business partner can use insurance-based investments and life insurance products to protect each other and help ensure the business continues. Life insurance can also be used to pay taxes generated through the sale of the business, or the transfer of the company to family members
or partners.
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or partners.
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> Chart a common course. Two partners; one direction
In a partnership, the need for a clear financial and business plan is extremely important. With a plan in place, both you and your partner will have a roadmap you can agree on. Then, you can use the map to make important decisions today, and in the future.
Your plan can also include protective measures to ensure the business survives if something happens to one of the partners, such as illness or disability. The plan will also help when seeking additional investment, selling the business, or attracting new partners.
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> Don’t let illness damage your company
Try to imagine what it would be like if your business partner was unable to work for an extended period of time. Suddenly, all the responsibilities of ownership would fall on your shoulders – as would all of the financial obligations.
Many of us know someone who has been diagnosed with an illness. When it happens, it can be devastating for the person, his or her family, friends and co-workers. And yet, the business must go on. Ask your advisor how you can minimize the effects an illness can have on your company.
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I’m running my own business and I need smart business moves… for my employees
> Attract and retain the best employees – and protect productivity
In a 2012 survey1,one of the top three reasons owners and managers gave for offering employees a benefits plan was to ensure the health and well-being of those employees and their families.
An employee benefits plan is a competitive advantage
Employees highly value the coverage and security offered through workplace health benefits programs. New and prospective employees view a plan as an attractive and valuable benefit of employment. Current employees often see the plan as a reason to stay with the company long-term.
12012 Manulife Financial Small Business Research Report
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From entry level plans that use ‘pooling’ – a plan design that keeps costs low – to more customized plans that appeal to your specific group of employees and achieve your specific goals, a group benefits plan can be a powerful incentive that protects the productivity of your company by looking after the health and wellness of employees. Ask your advisor how you can get started and launch your first employee benefits program.
> Encourage employee loyalty and commitment
When asked if it’s important for employers to offer a workplace retirement plan, a total of 85 per cent of respondents say it is either “important” (43 per cent) or “very important” (43 per cent)1.That could be because almost three-quarters of Canadians (69 per cent) say they do not have sufficient savings to maintain their current lifestyle into retirement.
Canadians are looking for workplace savings programs. And while plans might have seemed out of reach for smaller employers in the past, today that isn’t the case. There are a variety of valuable financial products and plans that even the smallest employer can offer to help employees to save for a more secure retirement.
1The Manulife Financial Workplace Savings Survey, 2012
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> Reduce financial distractions and worry for workers
Building a culture of success inside your company often involves helping employees deal with the day-to-day challenges that can carry over into their working lives. Almost three of every four Canadians are holding large levels of debt1 and according to Statistics Canada, the average Canadian now owes $1.65 for every dollar of disposable income earned.2 There is a very strong link between having a benefits and savings plan and being financially prepared. In fact, individuals with both a workplace benefits and a retirement savings plan are over 50% more likely to be financially prepared than those without plans.3
The same can be said for financial planning.
1Ceridian Workplace Wellness Survey 2013
2Financial Post/Bloomberg News, March 15, 2013
3,4Manulife/Ipsos Reid Health and Wealth Wellness Study 2014
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When employees are concerned, stressed, distracted or overwhelmed by financial worries, it affects their performances at work. Research has shown a connection between personal health, wealth, and workplace engagement4. Anxiety over finances – being prepared or unprepared – not only influences an individual’s ability to maintain a healthy lifestyle, but it has implications for the workplace in terms of lower productivity and motivation.
Employees feeling the stress of their personal financial situations are twice as likely to report being distracted at work; those who feel financially prepared are up to 22 per cent more engaged on-the-job.
Providing ways for employees to understand and manage their incomes, expenses, investments and other financial concerns can help improve their outlook and put them back in control.
When coupled with a retirement savings plan or other incentives, financial planning can help your employees achieve their financial goals – while helping you achieve yours.
I’m running my own business and I need smart business moves… for my company
> Take control of costs
In a survey, owners and managers listed labour, wages, marketing/advertising, travel, inventory, materials and overhead as their top areas of concern – in that order.1
With labour topping the list, your benefits advisor can be a great resource when looking for ways to keep costs in check.
Consider the cost of employee absences alone (when employees are away due to sickness, disability, personal or family responsibilities). Your benefits advisor can help you uncover the root causes of absenteeism in your company and implement strategies to address the underlying issues.
12011 Manulife Financial Small Business Research Report
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> Attracting new investors
Potential investors in your business will want details and specifics. These are the kinds of numbers normally found in a well thought-out and regularly updated business plan. Yet, surprisingly, many small business owners say they either don’t have a written business plan (40 per cent), or they only have a partial plan in place (34 per cent).1
An advisor can help you develop a business plan that outlines your strategy, guides you through future decisions and provides potential investors with a clear idea of what you’re doing, where you’re going and how you plan to
get there.
get there.
12011 Manulife Financial Small Business Research Report
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Starting from scratch? Here are some points to consider:
- Overview – if you have prepared the plan for a specific purpose or person (for example, a loan request), state the purpose clearly in the overview.
- What does your company do? Who is on your management team? How long have you been in business? Where are you located? Where are your customers? What's different about your company, product, or service?
- What is your business trying to achieve? Think about both short- and long-term goals.
- Include a detailed, accurate, and current financial report and forecast.
- Assess your company, your industry, your geographic market, and your competition in terms of strengths, weaknesses, threats, and opportunities.
- Describe your operation.
- Remember to include both your personal and professional goals.
Your plan should also detail the things that make your company a competitive force, an attractive investment and a desirable place to work. This includes current or future programs such as health benefits, retirement savings and Pooled Registered Pension Plans, employee training and other compensation packages.
Ask your advisor about business planning and development resources. He or she can introduce you to expert consultants who will help you build and test your plan. They can also help you overcome the obstacles that stand between you and your goals.
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> Manage the highs and lows of cash flow and taxation
Making sales and controlling costs are common concerns for business owners. Sometimes, the key to cash flow is to focus less on how much money you bring into your company, and more on how much money the company keeps.
Retained earnings in a corporation are an indicator of your company’s success and profitability, but it can be a challenge to take out retained earnings without incurring a large tax liability. Your advisor can help you enjoy the success of your company by withdrawing retained earnings in a way that minimizes tax liability.
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