BMO Financial Group

BMO Financial Group
BMO Wealth Institute

October 22, 2014 07:00 ET

BMO Report: Sixty Per cent of Canadian Entrepreneurs Concerned about Retirement and Cash Flow Issues

- Other top concerns among the nation's business owners include identifying income options and paying too much tax

- Three-quarters of entrepreneurs are focused on making improvements in their business operations and more than half are seeking to grow their business aggressively

- Majority of entrepreneurs do not have a succession plan in place for their business

TORONTO, ONTARIO--(Marketwired - Oct. 22, 2014) - To mark Small Business Month, the BMO Wealth Institute today released a report which examines what keeps Canada's entrepreneurs "up at night". The study found that 60 per cent of Canadian business owners are concerned with being able to retire from their business, as well as managing cash flow in profitable and challenging times.

Other top concerns identified included:

  • Identifying income options from business profit (56 per cent)
  • Paying too much tax (51 per cent)
  • Handling the business if a key employee quits or leaves (47 per cent)
  • Taking care of family members if incapacitated (44 per cent)
  • Managing business succession planning (39 per cent)

The report, Entrepreneurs: Definitely Not Your Ordinary Business Owners, also notes that, in terms of priorities, 75 per cent of entrepreneurs said they are focused on making improvements in their business operations and more than half (56 per cent) are seeking to grow their business aggressively.

"Entrepreneurs face a variety of stresses, both business-related and personal, as they travel the path from growing an idea to transforming it into a viable business," said Chris Buttigieg, Senior Manager, Wealth Planning Strategy, BMO Financial Group. "Most entrepreneurs are so focused on the day-to-day management of their businesses that they often overlook the importance of effectively managing hard-earned profits and taking into consideration critical medium- and long-term priorities such as retirement and succession planning. A comprehensive and personalized wealth plan, which includes a business succession planning component, is an important key for any business owner."

The report outlines several wealth management considerations for business issues and personal concerns:

Income options: Being paid by salary, dividends or a bonus can have different ramifications for the entrepreneurs and the business. Varying provincial tax rate advantages and tax-deferral options should be considered.

Minimizing taxes: Combining both personal and business taxes is beneficial to entrepreneurs. Leaving personal funds in an incorporated business can help to minimize taxes and reduce reliance on lines of credit.

Insurance needs: Selecting an insurance plan that can care for the entrepreneur, their family and their business can be challenging and require specific knowledge around risk and insurance-based strategies.

Minimizing risks: Using ownership structures, such as holding companies or family trusts, can help reduce the risk of owning a business.

Income splitting: Allotting assets or income to a spouse or other family members can be implemented to reduce the entrepreneur's family's overall tax bill.

Tax-advantaged savings plans: Individual Pension Plans, Pooled Registered Pension Plans, Tax-Free Savings Accounts, Insurance Retirement Plans and Group Registered Retirement Savings Plans are options to help the entrepreneur plan for the future.

Investment management: Managing the investments of a company is important and liquidity, risk and short- or medium-term cash needs must be considered.

Credit management: Accessing credit when needed is essential when owning a business. Ensuring that personal and business needs are in order help keep funds available for the business.

Succession planning: An overwhelming 69 per cent of entrepreneurs do not have a formal written succession plan in place. Establishing a plan to ensure the orderly transfer of management and ownership of a business to the next generation helps prepare the employees, the owner and the owner's family for when the owner is no longer involved in the business.

"Coordinated planning and advice from a financial professional is essential for those who own a business. When an entrepreneur seeks advice, it's important that both their business and personal needs are addressed in a holistic approach. This way, they can plan for a financially stronger future," said Mr. Buttigieg.

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About the BMO Wealth Institute

The BMO Wealth Institute provides insights and strategies around wealth planning and financial decisions. The Institute's team of professionals have deep expertise around all aspects of wealth planning including retirement, estate, tax and insurance.

To view a copy of the full report, please visit:

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.

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