It's an obvious question but also one that is likely often overlooked: when is the proper time for a business owner to consider a succession plan?

How to exit a business and the need for a succession plan was the topic of discussion at the Estevan and District Board of Tourism, Trade and Commerce's monthly luncheon last Wednesday at the Elks Hall. Dennis Duckerin, a financial consultant with Scotiabank Wealth Management in Regina, was the guest speaker at the luncheon and offered advice on the subject for those in attendance.

“What they say at Harvard Business School is the day you engage in a business is the very first day you should look at exiting that business,” said Duckerin who added that with Canada's population aging, a succession plan is becoming more and more necessary by the day.

“It is really important that when we engage in a business that we look at down the road. Most small business owners or proprietors do not think about selling or exiting that business until there is a significant event taking place i.e., death of a spouse, death or injury of a child.”

Duckerin said the unfortunate truth is that in most cases when that unfortunate event happens, it is already too late for the business owner.

“A challenge happens and it's ‘oh my gosh, what happens if something happens to me? It just happened to my lovely wife.' We need to try and work something out to try and get the value out of our corporation and nine times out of 10, it is too late.”

Although he admitted that is a gloomy prospect, Duckerin said there are a lot of things business owners must consider when it comes to their future. For instance, if they were to consider selling their business, who can they sell it to and how can they maximize their investment and years of hard work.

“Who are my potential buyers? Children, extended family, an external third party and employees. If it is an external third party, hopefully they have enough cash and well being that they can go (to a bank) and they'll give them the money and that will give you cash for your business. Those are the kinds of things you have to work now.”

Duckerin also stressed the importance of having a good tax and legal adviser when developing a plan. He said if such matters are not looked after, business owners may find themselves in a tough predicament should that unfortunate event he spoke of earlier take place.

“I use the word may because maybe you don't. But it is good to think about paying somebody along the way to guide and counsel you,” he said. “When you have a business, whether it be small, intermediate or large, there are three documents you should have that should work in conjunction together. You should have a business plan, which will just basically look at your business assets. You should have a financial plan which looks at your personal assets and you should also have an estate plan.

“I know it sounds kind of overwhelming, but you don't do it right away, you do it over time and you build those pieces of the jigsaw because when you want to retire or retire from the business you can look at the plan and say ‘are we on track?'”

Duckerin said with the task of running a business on a day-to-day basis such an onerous one, it is not uncommon for business owners to overlook taking care of such items. However, he encourages people to make sure they are natural practices for their business.

“I really encourage you, before there is a significant loss or before you become ill, think about, who could you transition your business to?”