indicatorSuccession Planning

Finding the opportunity within the complexity

Connecting the dots for business owners

By Christoff Boshoff and Myron Uhryn, MBA, CEPA, FEA, CIWM 8 November 2022 4 min read

Hockey is a popular spectator sport in part because of its complexity. Twelve players and one puck create almost endless opportunities for skillful play, interesting decisions, and surprising outcomes.

From a financial planning perspective, owning a business is a bit like a hockey game with two pucks on the ice. Business owners have so many financial planning options at their fingertips that choosing the right one can seem downright daunting. 

“Planning for a business owner should account for the business side, the personal financial side, and life outside of work for the owner and the stakeholders around them,” says Myron Uhryn, a senior financial advisor at ATB Wealth with a special focus on business owners. “The plan should also look at the interrelationships between all these facets.”

Christoff Boshoff, also a senior financial advisor at ATB Wealth, points out an additional complication. No aspect of a business owner’s financial plan exists independent of the others. Changes in one area can cascade into the others, for better or worse.. 

“Success in one area can make success in another one tricky,” says Boshoff. “If your business is not as successful as you’d like, you might be able to sell it and get good money. But being a successful business owner might make it trickier to be successful in post-sale life.”

From the experts at ATB Wealth, here are some insights on finding opportunities within the complex world of financial planning for business owners.

Around 80% of a typical Alberta business owner’s net worth is tied up in their business, according to Myron.

1. Start with the best information available

For the average business owner, their business is both their passion and their single biggest asset. 

That’s why the value of the business is usually the single most important part of a business owner’s financial plan. Yet too often business owners don’t know what their business is actually worth.

“Over the years we’ve asked hundreds of business owners what their business is worth,” says Uhryn. “You’d be surprised how often they are way off. Very often they are off by multiple times the value of the business.”

“If they sit down with an advisor who doesn’t know to question that, any planning they do will not be that useful.”

An accurate valuation of a business is not a back-of-the-envelope exercise. It’s a rigorous process that requires specific training and industry knowledge. It is not like buying a tank of gas or concert ticket. Business owners curious about the true market value of their business should seek out a financial advisor who appreciates the nuance of valuation and who can call on a large network of valuation experts.

2. Consider taking more than one bite of the apple

Three financial planning strategies that can help a business owner find wealth and success, referred to as "taking multiple bites of the apple". 

Many business owners assume that their financial plan doesn’t need much more than a valuable business that can be sold when the owner wants to move on. While understandable, a laser-like focus on the value of the business and the wealth of its sale can obscure other financial planning strategies that can help a business owner find success.

These strategies can include partial sale of the business, employee ownership programs, and taking on private equity. Boshoff calls them “taking multiple bites of the apple.”

“Business owners sometimes don’t realize that by taking a bite out of the apple, you can increase the value of the business as well,” he says. “Think of a manager buy-in or employee ownership share purchase. You take some value off the company, but you now have invested managers that want to stay with the company because they now own part of it.

“This is typically looked at very favorably when it comes to a valuation when it comes time to sell.”

3. Choose advisors with the right credentials

Business owners may feel bombarded with advice at times. It can be tough to know who knows what they are talking about. 

A business owner’s financial planning needs are unique and complicated. That means an advisor needs a wide range of expertise to do their job well—including the knowledge to know what they do not know. 

Specifically, the advisor should have some credentials behind their knowledge of exit planning, family business dynamics, and the businesses of business. 

Uhryn and Boshoff recommend looking for designations from the Canadian Exit Planning Institute, (CEPA) the Family Enterprise Advisor (FEA) program, and an MBA from a credible university.

“Personal experience is also huge,” says Boshoff. “You really don’t know what a business owner is going through unless you know the feeling of not being sure you’ll make payroll.

“Focus is also important. A team that focuses on business owners accumulates experience faster. If you just have one or two clients, you hone your skills more slowly. Focus lets you build your skills and create deep networks.”

Ultimately, a strong advisor for a business owner will help them understand the complexity of their options and simplify the process of choosing the best one.

“If your advisor can’t deal with complexity, if they don’t have questions, they may not the right advisor for you,” says Boshoff. “It is our job to understand complexity and synthesize nuances to create simplicity for our clients.”

Financial planning for business owners

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