In times of unprecedented uncertainty, courage is vital to business owner success
By Keith Brown
Successful business owners find the courage to change when they have a choice rather than waiting until circumstances force them to change. They know if they do not make change, change will make them.
Between what’s happening in parliament and provincial legislatures across the country, and the relentless, agonizing economic havoc being wreaked by the coronavirus, business owners are facing some of the toughest decisions ever. The longer they wait to make these decisions, the more vulnerable they will become to forces beyond their control.
At times, holding on and hanging in there are signs of courage. This is not one of those times. This is a time that demands we find the courage to recognize when to let go… and find even greater courage to actually do it.
If they haven’t already, many business owners will soon have to decide about laying people off, retrenching, and/or changing their business strategy entirely. Still, there are many strategies they can employ to create a buffer, a little breathing space, while waiting to see what’s next.
Here are just a few:
- Apply for all available government benefits. Get your accountant on the job to research things you may not have considered or have forgotten about because of the panic over COVID. This includes financing programs, loans and capital investments, grants and other forms of financial assistance, and tax credits. (A recent search of the federal government’s web site resulted in 617 different options for financial support.)
- Rationalize your employment liabilities:
- Identify your critical business functions and key people
- Do a full HR review
- Keep the performers get rid of the others
- Streamline employee benefits
- Renegotiate leases
- Negotiate interest only loan repayment deals with banks
- Creditor proof your corporate assets by:
- Assessing vulnerability to law suits
- Evaluating ownership and corporate structures
- Moving cash or cash type assets from operating business into a holding company
- Make sure operating businesses with any risk are paying out excess cash to a holding company (that could potential have less risk) or paying out to the shareholder. Do not have excess cash in your corporations. This is also a way to reduce taxes. If you need to put cash back into your business, do it as a secured creditor with a proper security agreement for a “Shareholder’s Loan”.
- Make sure everything is documented including business continuity in the event of owner death or incapacity, bankruptcy, change in control, wind up.
- Review your personal financial planning. Be sure you know where you will be if the business goes down or there is a change of control of the business.
- Creditor proof your personal assets by:
- Making sure all of your investments (like RSP’s, TFSA’s and other accounts) have a “Preferred Beneficiary” such as a spouse, child, or grandchild named in writing with the investment company. Insurance companies provide the best creditor protection for investments.
- Making sure that all of your cash value or other life insurance has a “Preferred Beneficiary” such as a spouse, child or grandchild named in writing with the insurer.
- Review all property ownership agreements for personal guarantees.
- Review all bank loans and or other loans to confirm you do or don’t have personal guarantees attached. If personal guarantees exist, ask the bank to remove those guarantees or look to an alternate financial institution that does not require personal guarantees for the debts. This includes credit cards.
- Get out of all co-sign agreements where possible.
- All rental / leases for office or storage… including your car probably have personal guarantees and those should be removed as much as possible. …
Your courage is never tested if only wonderful things happen to you. So, in the face of uncertainty, remember that the courage to jump into the void gives you the power to leave behind those who merely stand and watch.
I welcome your comments and questions.
Keith Brown has many hard-won and important designations including CFP, CLU, CH.F.C, FEA, CExP™, and TEP. All of those make him a well-rounded and experienced Business Family Advisor.
In addition to being founder and CEO of Financial Confidence Advisors, Keith is a member of the campaign committee driving the Canadian Chamber of Commerce’s efforts to reform Canada’s tax system to ensure inclusive post COVID recovery and growth. He is also the Tax Policy Committee chair for the Conference for Advanced Life Underwriting (CALU).
(CFP: Certified Financial Planner, CLU: Chartered Life Underwriter, CH.F.C: Chartered Financial Consultant, FEA: Family Enterprise Advisor, CExP™: Certified Business Exit Planner, TEP: Trust & Estates Practitioner.)