Understanding your personal net worth will ensure there are no unreasonable expectations built into the transition plan. It’s not uncommon to find that the transitioning individual(s) most significant asset is the business that they are transitioning; this is why valuing the business is important.

Once personal and business value is determined we will provide guidance surrounding how much you should sell your business for, required dividends, or other compensation from the continuing business to meet personal retirement financial needs.

We have outlined the financial goals in step 1; now consider the funding requirements to meet those goals. Understanding the available cash flow after considering the projected profit, debt service obligations, dividend strategies, and capital purchases will provide us with information that allows us to build your Business Financial Plan.

This step in the transition plan ties everything together; your vision and goals combined with net worth and cash flow. Then the effect of private and government pensions, RRSP’s, LIRA’s, RRIF’s, etc. on the overall cash flow and income tax strategy are considered.

Taking into account all the steps prior, we also discuss the following with you:

• Considers ownership transfer
• Considers management transfer
• Considers training of the successors
• Considers timing of transfers, responsibility & accountability
• Considers income tax effective methods to transfer or reorganize

It is important that all stakeholders are aware of the plan, not only key stakeholders. Tax & accounting, legal, wealth management, and financial institution professionals, and those supplying services to the farm/business will need to be informed of applicable information to ensure a seamless transition.

Considering the “what if’s” and being prepared for them is the final step in ensuring the plan is set up for success. We will consider potential risks to the plan and undertake a discussion on whether the risk is accepted or mitigated in some manner.