Business Owner’s Return on Investment

Business Owner’s Return on Investment

While generalizations can be problematic depending on the context, we believe it is fair to say people invest to increase their savings. Whether they invest in the short- or long-term, at the end of the time frame, the investment is meant to serve a purpose. The purpose can vary from a down payment on a home to funding retirement but regardless of the purpose, our investments, make up part of our overall net worth.

For business owners, their business is one of their investments. In fact, it is likely their largest investment – most self-report having 75-95% of their net worth tied up in their business. And like all investments, at some point in the future, they will want to ‘cash-in’ on their investment when they sell their business and transition to retirement or the next stage of their business life.

While many people in their working career put money into investments like stocks, bonds, mutual funds, real estate and so on, a business owner keeps investing in their business to grow it. That is to say, they often continue to add money to their business to expand, update equipment or otherwise build it. However, when they do this, entrepreneurs don’t necessarily think of this as part of their investment portfolio. Many would be unable to tell you what the return on the investment in their business is.

Business owners tend to be focused on growing their business and keeping it strong so it flourishes in the long-term. This mindset, though important, may not be conducive to the understanding that all the time and money they put into their business is an investment that is required to have a return.

Working in the business rather than on the business can limit an owner’s future thinking for eventual exit and the need for a return on their investment. Intent Planning encourages owners to consider what return they would want on an investment in another business. If they were a third-party investor, what is the level of return they would want to see? What is the minimum return and what would be ideal? If they are not getting that from their business today, how can they make sure they will in the future?

Approaching your own business like a third-party investor takes critical, objective thought and intention. Quite often, it will be the first steps toward clarity about the current value of their business and the importance of future value needed to harvest the highest return on their investment. We recommend starting with a company-wide review of the return on investment and then a deeper dive into each division, product or service to find out where performance is weak or strong. Next, take steps to strengthen the strong areas and adjust or remove the weak ones.

Building transferrable value in your business takes intention and commitment. However, it is in this transferrable value where your business’s return on investment lives. If you are unable to achieve a desired return on investment, how would the next owner be able to? Not being able to answer that question means a lower sale price, or no opportunity for sale, for your business.

Building your business to be ready for sale at any time makes good business sense. Keeping it in optimal condition means you are ready should an unsolicited offer be extended to you. Even if a sale isn’t forthcoming, your business is positioned in a place of strength with transferable value or increasing return on investment.

While non-business owners tend to follow a diversification strategy with their investments to make sure they manage risk, business owners are unable to because so much of their net worth resides within their business. Yet entrepreneurs seem to be comfortable with this risk and in fact, foster it by continuing to invest in their business with time and money. They do this year after year with the hope and understanding that, one day in the future, they will be able to harvest the wealth and transition to the next phase of their life.

Intent Planning team members are committed to helping all our business owner clients have the best possible return on their investment so their long-term goals can be achieved. Connect with us to start thinking like an investor in your business and building its transferrable wealth.

The Entrepreneur Evolution

The Entrepreneur Evolution

The reason why an entrepreneur starts a business is as individual as the person. However, once the business has begun, it tends to fall into one of four stages: startup, growth, maturity and renewal or decline. Throughout all these stages the owner makes choices that affect the value of their business.

To build and maintain value in a business requires intention at all levels of operation. An owner, and their leadership team, make choices that affect everything from culture to strategy and operations to finance. Value comes from everyone being on the same page and working towards commonly agreed upon goals. The bulk of an owner’s personal wealth is contained within their business making the ability to liquidate the asset at some point in time, absolutely critical.

For most business owners, the eventual sale or transition from their business is a distant thought during the startup phase and perhaps even into the growth stage. However, there is a case to be made for using transition planning – which is part of good business planning – as a strategic approach to building and growing a business.

For an owner who has the bulk of their wealth held within their business, transferable value becomes the return on investment at time of sale. It is therefore important to build and plan for the best return on investment possible.

During startup and early-stage growth, thoughts of an eventual sale of the business can seem like a lifetime away, and in fact it may be. However, dedicating attention to value and building a business that will result in a successful financial outcome for the owner is critical for a life after business that meets the owner’s expectations.

There are three main mindsets owners fall into when it comes to transition planning: exploring, pivoting and triggering. A business owner’s mindset depends, in part, on their timeline, end goals and financial need.

Exploring owners tend to be taking the first steps to understanding the concept and components of building transferable value and what transition planning looks like for them. Likely this owner is early in their business’s life and beginning to explore the options for transitioning from their business. They may not be interested in transitioning from their business anytime soon but are interested in learning more about the process and how to set themselves up to be successful at some time in the future.

Pivoting owners tend to be further along in their entrepreneurial journey and are ready to invest time and attention in an intentional way to optimize their business’s value and work towards being transition ready. This owner is ready to pivot to a role that requires they spend more time working “on the business” rather than “in the business”. A pivoting owner may even have a specific timeline in mind for their eventual exit and so needs to dedicate intentional energy to set themself and their business up for the successful transition outcome.

Triggering owners tend to be in the later stage of their business ownership journey and they find themself wanting to exit their business sooner rather than later. Quite often an owner can be triggered into action because of circumstance: health issues, loss of passion, changes in life goals and any number of reasons that the owner experiences, both personal and professional. In this case building value may play a smaller role for the owner and transition options or decision support is more important.

No matter the stage of the business, value acceleration and transition planning are intentional and part of a strategic plan. Statistically, more than 60% of owners rely on the proceeds from the sale of their business to fund their life, yet it is estimated 70-80% of businesses will fail to transition to a new owner. It is critical business owners plan to successfully transition their business at the highest value possible. Whether exploring, pivoting or triggering, transition planning is for every owner at every stage of their business’s life. Please connect with us if you are a business owner and want to start being strategic about growing transferable value in your business and planning for an eventual transition.

How do financial advisors get paid?

How do financial advisors get paid?

Canadian financial advisors provide their skills and expertise to serve our financial planning needs by recommending and providing solutions for our specific situation. How financial advisors are paid has become more transparent over the years. This helps us, as consumers, understand how the professionals providing their financial expertise will be compensated.

According to the Canadian government, a financial advisor is: “anybody who helps you manage your money. This could include an employee of your financial institution, a stock broker or an insurance agent.”

In Canada, there are four main ways financial advisors are paid: client fees, commissions, salary and bonuses. In most cases, advisors are compensated in combination of these ways. Let’s take a closer look at each of these in turn:

Client fees – This method of payment is when the client pays the advisor for their services either directly (fee-only) or indirectly (fee-based). Fee-only is usually for financial planners like a Certified Financial Planer (CFP). A CFP may charge a flat fee or a one-time fee to create a financial plan or provide a second opinion about an existing financial plan, for example. These individuals are transparent about what their fees are for, how you will be invoiced and what you will receive in return – advice, recommendations, time and so on.

Most Canadian financial advisors, who collect client fees, fall more in the fee-based category. This means they are paid with a small amount of your investment, usually referred to as a management expense ratio (MER). An MER is contained within the total built in cost of owning a mutual fund. It is important to note you do not pay the MER directly; rather it is paid by the fund itself, which reduces the value of your investment accordingly. The MER is taken out of the fund before the performance is calculated and usually ranges from 1 to 2.5%.

Alternatively, advisors can also use F-class mutual funds that don’t charge MERs, or they can purchase stocks and bonds directly and not charge a commission. In these situations, advisors can charge their own management fee, which they set after a conversation with a client. This fee is also a percentage of assets under management (i.e., 1.2% for F-class and 1.5%-2% for a stock/bond portfolio) and, like an MER, is paid directly by the fund.

Commissions – This type of compensation makes up the largest portion of how a financial advisor is paid. Financial advisors are paid commissions based on the solutions provided to their clients. The commissions take on a few different forms: upfront fees and transaction commissions. Upfront fees are commonly found in mutual funds where a percentage is paid to the advisor for each investment made into a mutual fund. Transaction commissions are more common for stock-based investments and are usually a flat fee rather than a percentage. Example of a transaction requiring a fee is selling or buying stock on your behalf.

Salary – Financial advisors may work at a financial institution, like a bank, and be paid a fixed salary for the work they do. This is especially true for newer financial advisors who are still building their client base. Typically, even if an advisor is paid a salary, they still may also earn client fees, commissions and bonuses. For many financial advisors they may have a ‘base’ salary and the bulk of their income is derived from a combination of the three other sources of income covered in this blog.

Bonuses – Being a financial advisor is a performance-based profession. As with many performance-based professions, financial advisors have the opportunity to earn additional income, like a bonus, if certain criteria are met. Criteria are specific to each organization. Some examples of financial advisor bonus criteria are hitting sales targets for new investments; adding new clients to their business; achieving team goals and recruiting new team members.

Financial advisors provide a great service to their clients and should be fairly compensated for the work they do and clients have a right to know and understand how this happens. Transparency around compensation fosters trust and open communication, both of which are must haves in any successful client/advisor relationship. Intent Planning advisors are paid based on a combination of the above methods, depending on the solution best suited to each client.

If you would like to talk to your advisor about how they are paid, in connection with your portfolio, please connect with us.

Debt: The Sometimes Good, Bad and Ugly

Debt: The Sometimes Good, Bad and Ugly

Many adults have some form of debt by the time they reach 21. This may be a credit card, a car loan or perhaps student loans. As we grow older and enter different stages in our lives, our debt changes and evolves with us.

Paying attention and managing your debt ‘portfolio’ is as important as your investment portfolio. There are various types of debt each with their own purpose and they each have an impact on your financial health.

There are four main types of personal debt available to most adults:

Secured debt – This type of debt is secured with an asset to be used as collateral. A car loan is an example of this type of debt – the lender who provides money for the purchase claims ownership on the title of the vehicle. This type of debt typically has a reasonable interest rate based on the creditworthiness of the borrower.

Unsecured debt – This type of debt is based wholly on the borrower’s credit and is offered based on their ability to repay the funds. Credit cards are a good example of this type of debt. There is a contractual agreement to repay the funds, but with no collateral on the line, default or non-repayment has more risk and potential cost to the lender. This means there are typically higher interest rates with this type of debt.

Revolving debt – This debt is like a credit card in that there is a limit to the credit (debt level) available. A revolving debt offers a borrower access to a certain amount of funds on an as needed or revolving basis. An example of this type of debt is a line of credit (unsecured), or home equity line of credit (secured).

Mortgage – This debt is most common and usually the largest and longest debt someone typically has. A mortgage is a secured debt with the home (or property) as collateral. Mortgages typically have the lowest interest rate available, although still tied to the borrower’s creditworthiness, and average between 15-to-30-year terms. During that time, the mortgage is re-negotiated on a regular basis.

Each of these types of debt serves a purpose in helping us through life’s stages and needs. Plus, they each come with their own ‘cost’ or interest rate. Some of these debts are indeed a form of investment. Think mortgages, as typically the value of property increases over time. Loans for improvement to enhance your property will also increase its overall value and is often considered an investment.

There are also investment loans available. While ‘collateral’ takes on a slightly different meaning in this situation, they can be a great way to utilize borrowed funds. Often loans for investment purposes can be at a lower interest rate than the return on the investment the money would gain. Many people take out annual investment loans to purchase RRSPs and then use the increased tax return to immediately pay off the loan. Yet other options allow for longer terms usually with collateral. Interest rates and repayment terms are tied to creditworthiness, so it is important to consider your specific situation with your lender and financial advisor to make sure an investment loan is a good option for you.

Maintaining some type and amount of debt is helpful in your life. However, unsecured debt, without an appreciating asset, can be damaging and should be entered into with intention and purpose. Unsecured debt in the form of consumer loans, like credit cards, can be very tempting to use in the moment without considering what the re-payment plan may be.

Many of us have found ourselves in a position where our debt has gotten the better of us. Develop a plan to pay down your debt as part of your financial plan, if you find yourself in a situation where you are uncomfortable with the level of unsecured debt you are carrying. Paying down one side of your financial statement is as important as investing in the other and takes intention and commitment.

There are two primary ways to pay down unsecured debt. Both methods require you to compile all the information available about your current debt including current balances and the interest rates for each source of debt. Here are more details about the two ways to pay off unsecured debt:

Snowball method – In this approach, you line up your debt and make the minimum payment on each one, except the smallest. For the smallest debt, pay the minimum, plus any additional funds you can afford until that debt is paid off. Once that debt is paid off, you turn to the next smallest and add the money you were using for the smallest debt to that payment until the balance is zero. The name comes from the process of continuing to build on the payment being focused on each one grows as the number of creditors decreases.

Debt-stacking method – This approach tackles the debt with the highest interest first. Since unsecured debt tends to have the highest interest levels this will also help you focus more on the that type of debt. In this method, line up your debt from highest interest to lowest and begin at the top. Similar to the snowball method, make minimum payments to all sources of debt only this time add any additional money to the debt with the largest interest rate. Once the highest interest debt is paid off, roll your payment into the next highest and so on.

Both repayment options are effective. Debt-stacking is technically better from a mathematical perspective; however, from a quick-win, psychological perspective, the snowball method may be better for some. Be sure to choose the method that will work best for you. Committing to debt repayment also requires you to stop accumulating unsecured debt as much as possible.

To talk to an advisor about your debt as it relates to your investments and overall financial plan, connect with us today. Our professional advisors are happy to talk through your options.

The True Value of HR

The True Value of HR

“Your people are your business’s most valuable asset.”

When it comes to an external buyer or investor looking at your business this adage is very true. A new buyer or investor can learn about a company from asking a few simple questions about the team and human resource function within it.

As a leader or owner in your business, you should have answers to these three questions. What your answers are say a great deal about the state of your human resources.

How often do people leave your company?

The person asking this question is interested to know what the turnover is in your company. High turnover is expensive because the team is constantly training and recruiting. High turnover is an indicator of possible culture or recruiting issues.

It is important to know why people are leaving and how you can take steps to slow down the turnover rate. If people are leaving your business, then uncover why. Is it the culture? Is it the work environment? Is it their role or responsibility? If your turnover rate is high because you are terminating people, it is important to understand what the core problem(s) is/are. Have people been properly recruited and vetted? Are fit, skills and experience all being considered? Is your training function working properly? Are expectations clearly defined?

At the end of the day, high turnover is a drain on a company. It is important to understand why people are leaving and how you can slow the flow.

What is the average tenure at your company?

Tenure is the opposite side of the turnover coin. The person asking this question is seeking insight about culture, but also about skill level, knowledge stores and key personnel. A high team retention rate (compared to similar industry averages) can be both an asset and a liability. An asset because it can speak to a positive culture, appropriate compensation packages and potential efficiencies. High tenure can be a liability because it may mean the knowledge or key customer relationships are housed within individuals, changes may be slow to be adopted or fought against and sometimes long-term employees may even be kept because of habit or out of fear.

It is important to understand if your company’s tenure data is an asset or liability. Here are some things to consider:

  • What is the culture of your organization? Does it lend itself to people choosing to stay?
  • If there are people with long tenure or inherited hires, are they still the right fit for the role they are in or is there room to modify to achieve better results?
  • Does the historical, institutional knowledge held within long-term individuals exist in writing anywhere?
  • Are relationships maintained with long-term employees also fostered by other individuals?
  • Do long-term team members impede evolution or changes due to habit or are they resistant to change? (i.e., ‘That’s not how we do it.’)
  • Are long-term team members a good representation of the culture and brand you want your company to represent?

Your answers to these kinds of questions will give you an indication of weather your company’s average length of tenure is an asset or liability.

Can I see your HR files?

Documentation is the backbone of any company. Having documentation on important functions, procedures and policies is key. Human resource documentation is varied and critical. From codes of conduct and role descriptions to vacation tracking and annual reviews. The amount and quality of HR documentation tells a story about the company.

If you were an outside investor or buyer, what story would your HR documents tell? Are your job roles clearly defined? Are there updated nondisclosures in place? Are HR policies and procedures up to date and enforced? How much vacation, sick or banked time is owing? (This can be a huge, looming cost if not properly managed.) Are reviews done regularly and with proper documentation? Regular reviews lead to an optimal team with proper competencies, attitudes and culture fit making sure those at the company are there for the right reasons.

If these three questions have given you pause and left you feeling a little uncomfortable, chances are your human resource function could use work. Like many parts of a business, HR grows and changes as the business evolves. It is important to keep all the elements of human resources current and relevant for maximum day-to-day efficiencies and in the event a buyer or investor is in your future, this effort will add value.

Getting a clear, unbiased understanding of your company’s human resources is a critical component in the overall value of your business. An external investor or buyer is very interested in the ins and outs of your organization’s human resources. There are immediate things you can do to improve where they are and move to where you want to be. Connect with us to help understand your human resources and next steps.

PIVOT – The Summary of 2020 and Business Decisions

PIVOT – The Summary of 2020 and Business Decisions

As soon as our alarm goes off in the morning, we begin making decisions and weighing options. Do I press snooze? Do I have time for breakfast? Should I stop for coffee? From these kinds of mundane choices to the critical ones at work with far-reaching impact (and possibly cost), our days are filled with decisions that need to be made.

Some might argue the decisions we make on our own with no input from others are the easiest to make. Afterall, you don’t require anyone else’s opinion, data or thoughts about consequences to weigh your options and make a choice.

However, the bulk of our daily decisions are made at work and typically involve multiple people with multiple interests and opinions. We have all been on teams where the decision-making process has been slow, painful and possibly even hostile or divisive. These experiences can taint future teamwork and projects.

Many of us develop tactics to help teamwork and collaboration situations functional and as effective as possible. Unfortunately, ‘functional’ and ‘as effective as possible’ don’t always result in the best outcomes. In fact, it often results in more of a ‘this will do’ situation.

Imagine how you would benefit from tools and a framework you could take from team to team regardless of your role or the work that needs to be done. A framework to help the group collaboratively and decisively determine what matters so they can make decisions and work towards a shared purpose quicker.

Decision Dynamics, powered by Better Practice™, is a framework individuals, teams and business owners adopt and implement to facilitate collaboration, centre accountability and bring people together to define success and achieve it faster.

COVID-19 fundamentally changed how businesses operate and continues to demand fast-thinking and pivoting – the ability for individuals and businesses to rally and adapt with agility – in order to reimagine ‘normal’.. The team at Intent Planning was no different. While financial service is essential, the way we operated daily and interacted with clients changed immediately and continues to evolve.

Our leadership team leaned heavily on the principles of Decision Dynamics to help navigate the ever-changing environment the pandemic created. We were able to identify what matters, make better decisions faster AND act on those decisions with agility and confidence…together. Using principles like ‘the truth is enough’ and ‘beware of unintended consequences’, we were able to discuss options and reach decisions quickly while also remaining open to the need to change or modify as the situation evolved.

As professionals and team members, we highly recommend the self-paced course, Introduction to Decision Dynamics, powered by @BetterPractice, to enhance your individual skills and how you interact with teams. It is also great training for teams who want to expedite decision making and improve collaboration.

Teams are often asked to do more, quicker and with added challenges like time zones and competing priorities. The concepts, principles and tools Decision Dynamics offers will help you clearly identify what matters, make better decisions faster and act on those decisions confidently and nimbly, as a team.

Connect with us to learn more about great ways to add to your professional tool kit.

Mitigating Emotions when Investing

Mitigating Emotions when Investing

Making decisions when we are clouded with emotions – good or bad – tend to result in regret.

Investment decisions are no different.

When it comes to our finances and investments, each of us can be swayed by emotion-based reactions or the influence of non level-headed thinking. The advertising professionals know this about us as do the companies who set up their retail check-outs with the appropriately called ‘impulse items’ that often engage us on an emotional level.

The global financial markets are not human. However, from the outside, the impact of world events and uncertainty can often appear like an emotional reaction in how the markets behave. What appears to be emotional to those of us uneducated in the complicated workings of global financial markets are actually reactions based on a number of inter-acting elements.

Unfortunately, the headline grabbing behaviour of the financial markets elicits emotions from us as investors. Often the market reactions can push us to want to make emotional decisions about our investments at the very time when level headedness should prevail. In moments like these, having a well thought out financial plan and working with a financial advisor will help you navigate the options and mitigate decisions made from emotional reactions.

The best tool to utilize in keeping your emotions in check is a financial plan built by your advisor to plan for your short- and long-term goals. A plan will ease your worries about your financial future and also provide a clear path to achieving your goals. Both of these benefits will help you avoid making emotional decisions.

There are two primary strategies a financial advisor will propose in building your portfolio to help your investments weather long-term market trends and reacting to short-term emotional influences. Dollar cost averaging and buy and hold are tried and true strategies with proven effectiveness for long-term investing and keeping emotions in check when it comes to our finances.

Dollar cost averaging uses the advantages of routine to help you with your long-term investment strategy. Systematic routine deposits will allow your money to be invested regardless of what the market is doing. If the market is lower you will be able to purchase more and if the market is up your funds will purchase less. This will work in your favour over time, averaging your investment purchases while adding the inherent advantage of compound interest and a regular investment routine.

Buy and hold as a strategy is used to help with long-term investments. Once your financial plan is developed and your investment has been made, buy and hold means your investment should be in the market for the long-term. This allows compound interest and the long-term returns of the markets to work for you. Buying and holding supported by regular review with your advisor also removes the emotional desire for us to react and lock-in negative returns on our investments. Your advisor knows even the most seasoned stockbroker is unable to time the markets routinely and successfully to their benefit, making buy and hold a safe approach for long-term investments.

Daily rises and falls vary but ultimately are part of the life of the market. Buy and hold teaches us timing the market is nearly impossible and avoiding cashing in investments while the market is low requires investors to manage emotions and commit to the financial plan.

Both of these strategies require investors to let logical, methodical and habitual routines take the lead over emotion. A financial advisor will work with you to build and regularly review your financial plan to make timing the market unnecessary and fighting the urge to react to your emotions easier.

Global markets are made up of individuals and organizations with people who do their best to keep emotion out of their actions. The markets’ daily activity is based on global events, various countries’ economies, the publicly traded companies making up the markets and a variety of other factors. 2020 saw some dips and rebounds as the impacts of COVID-19 on economies around the world became apparent. The market will likely continue to reflect uncertainties as the US election and global COVID-19 recoveries play out over the next few months.

One of the top benefits of working with a financial advisor is using their level-headedness to our advantage as an investor. Connect with us to put the professional skills of one of our financial advisors to work for you.

3 Ways Building a Household Budget Can Reduce Stress

3 Ways Building a Household Budget Can Reduce Stress

Uncertainty and money issues can increase stress and anxiety. Many of us have experienced stress due to money issues, at some point in our adult life. COVID-19 has impacted the financial health of many of us adding additional stress to an already uncertain situation.

Creating and following a household budget can help manage financial anxiety and reduce stress in three ways.

1.Monitor and allocate

The first step of building a home budget is to collect information about income from all sources and outgoing funds. Typically, regular monthly expenses like mortgage or rent, heat, water, phone, insurance (home, auto, personal) and so forth are easy to identify. Other, expenses like groceries, transportation, grooming, entertainment and so on can add up and will vary month to month.

Your first home budget draft can use estimates; however, careful tracking over the first three or so months will allow you to update your budget with actual expenses. (There are lots of online tools or mobile apps to help.) The tracking requires monitoring all expenses and income. A spreadsheet or several envelopes for receipts and invoices can be used to track all outgoing funds. Create four to six expense themes to track all the money your household spends in a month. Sample themes could be:

  • Groceries – This includes all groceries, from all sources used to cook or prepare food at home. Look at the main grocery shops as well as all the times you grab a few items between main shops.
  • Entertainment – This typically includes evenings out – movies, activities, cocktails, coffee with friends, etc. It can also include dining out, unless you would like to track dining out separately to monitor it more closely, especially if you eat out routinely.
  • Vehicles – It is important to understand the cost of your vehicle – gas, cleaning, maintenance, parking, all the associated costs to owning your vehicle. If you don’t own a vehicle, this can be a transportation category and track transit fare, taxis or vehicle rental/car co-op fees.
  • Clothing – Purchasing clothes, uniforms and footwear factors into monthly costs. If clothing isn’t a regular monthly expense, you can slot it into the miscellaneous category.
  • Children – Childcare, activities, events, supplies. Children have a wide assortment of costs and expenses some are routine and others fluctuate depending on the season. Tracking all of them is important.
  • Pets – If you have a pet, they come with their own costs. Be sure to track all of them – food, day care, grooming, toys, treats, vet visits and so on. 
  • Miscellaneous – This category should be for items that don’t occur every month. Gift purchases, in-app spending (buying books, music, etc.), special occasions, haircuts or other grooming can be considered miscellaneous.

It is important to make categories that are relevant and important to you and reflect your regular expenses. Categories should be broad enough to capture all the expenses but specific enough for you to have a good understanding of what you are spending your money on.

2. Set priorities

Once you have a good understanding of your regular incoming and outgoing funds you will be able to see trends. For example, it is one thing to have a vague understanding of how many times you ‘grab a coffee’ but when you see it tallied into a lump sum, you will reach a different level of understanding. Seeing all your monthly expenses itemized in one place, lets you make conscious decisions about how to best spend your money.

Having a full understanding of where your income is allocated – needs versus wants – puts you in a position to prioritize funds and determine if any changes are needed. This is especially true if building a budget has highlighted stressors on your finances and motivated you to find ways to reduce or eliminate the source of stress.

Setting priorities for your budget also includes identifying debt and building a repayment plan, especially for consumer debt with high interest rates. Debt is typically a source of stress for many of us, so determining how to reduce it can help ease stress right away.

3. Plan for the future

A household budget can help you prepare for the future, including a debt repayment plan. Once a plan for debt is in place and underway you can add a savings plan to your budget.

Savings can be divided into short-term, mid-term and long-term goals. If possible, automate savings with automatic withdrawals to ease the process. Having defined savings goals helps keep you on track and focused to remain committed to your budget.

A source of stress for many of us is the unknown and the impact of possible scenarios can have on your family’s finances. A budget that plans for the future includes ways to protect your family and mitigate risks. For example, an emergency account with three to six months of expenses to help in the event of an interruption to your income.

Other unexpected events can be planned for with insurance plans to help in the event of a critical illness or disability. Having specific insurance solutions in place can bring a great deal of comfort and reduce concerns for our family.

A financial advisor can work with you to build a plan to determine your family’s specific insurance needs and help automate your savings with pre-authorized deposits. Engaging with a financial advisor also adds an element of accountability and support for you to live within the budget you developed.

Money insecurity in any size and at any point in our lives can affect our mental health with increased anxiety and stress. If your expenses are over-taking your income or if you would like to make changes to how you feel about your household finances, connect with us and we can help you work through your situation with you.

If you are looking for resources, here are some that can help:

Budget Building and Planning Tool

Credit Card Pay Off Calculator

Accelerated Debt Payment Calculator

Compound Interest Calculator

How do you know you are ready?

How do you know you are ready?

We face many ‘readiness’ questions for big and small things throughout our lives. Am I ready to get married? Am I ready to be a parent? Am I ready to change my everyday habits?

For family farmers, farm transition readiness is a question that brings up as many emotions as it does logical thoughts. Unlike many careers, farmers tend to live and work in the same place and their land ‘or work’ has been part of their family heritage for much longer than their lifetime. Being a farmer is quite often more than what you do, it is often who you are.

Being ready to transition your family farm goes well beyond circling a date on the calendar and getting finances in order. Knowing when you are ready to transition your farm involves several discussions with family, on-farm workers and trusted professionals as well as time spent reviewing options, finances, needs and current situation. Plus, the time spent preparing yourself and your family emotionally for the changes to come on the farm.

According to Statistics Canada’s 2016 Census of Agriculture[1], the average age of Canadian farmers is 55 years old – with only 9.1% being under the age of 35 – and the average size of farms has increased. Like Canadians as a whole, the population is aging, and baby boomers entering retirement age en masse, are considering what their futures hold. 

The same Statistics Canada report shows 8.4% of farmers have a formal farm transition plan. The findings also show that sole proprietors (4.9%) are less likely to have a written succession plan compared to farm corporations (16.3%).  Farm transition is too important to leave to chance and the longer it takes to establish a plan increases the risk of an unsuccessful transition.

There are many components of farm transition planning and very few farmers have qualified professionals to help them navigate the process. Team members at Intent have been working with Canadian farmers for over 25 years to ensure their farm transitions are successful and therefore able to continue thriving well into the future.

We have created and implement a multi-facetted process where we take the farm and family members through:

  • various types of financial analysis for family members and farm;
  • farm business strategy including structure and human resources;
  • economics of the farm’s production;
  • family dynamics and communication;
  • an overall risk assessment and solutions for mitigating them; and
  • review any value-added ventures.

Each phase in the process also considers tax implications to farm and family, the various family dynamics involved and the longevity and future prosperity of the farm. Our approach is truly holistic and focused on the most positive outcome possible.

The team at Intent has also developed a 10-point questionnaire to help farmers determine how ready they are to transition their farm to the next generation. The higher the point value the more likely it is that you’re ready to transition your farm. We would encourage you to take five minutes to answer the questions and get a better sense of your farm transition readiness. This is an excellent, mindfulness exercise regardless of whether you’re just starting or are well on your way to establishing a farm succession plan.

In our experience the most difficult step in planning to transition the family farm is starting the conversation. Having trained, experienced professionals by your side is a critical asset to you and your family. To talk about how farm transition ready you are and add us to your team of professionals, connect with us today.


[1] https://www150.statcan.gc.ca/n1/daily-quotidien/170510/dq170510a-eng.htm?HPA=1

Documented Procedures are for Companies of ALL Sizes

Documented Procedures are for Companies of ALL Sizes

Whether you have four staff or forty, documenting your business’s procedures will make for a stronger workplace, smoother ongoing operations and make it easier to on-board new people. Plus, should you ever want to sell or transition your business, documented procedures – how things are done – will add value to your business in the eye of a buyer.

Anything your business does repeatedly, involves more than one person or is key to your success, should be documented. When you first started your business, you likely relied on ‘having everything in your head’ and knew what needed to happen to deliver your product or service. While this may work initially, standardized practices will help keep your business efficient and sustainable, long-term. If your team expands and the opportunity to delegate arises, it is important to ensure your processes can be replicated in order to provide a consistent level of service to customers.

If your business is like most others, there is an extraordinary amount of institutional knowledge within the minds of you and your employees that doesn’t exist in documents – virtual or hard copy – anywhere. What people do ‘naturally’ in their day to day jobs is near impossible to replicate without an instruction manual. This may mean your day to day business gets done, but what happens if people with the institutional knowledge are absent or worse, leave?

If a buyer came knocking at your door with the offer of a lifetime, would your business procedures be readily available today?

Procedures, big or small, are key to the ongoing success of any business. Well documented and updated procedures allow for multiple people and entire teams to share in the collective institutional knowledge. Your company will experience many benefits, for example:

  • The knowledge of senior team members, or even the owner, can be documented and shared.
  • Documenting and sharing procedures across the team can often lead to fresh eyes and new perspectives and lead to finding ways to improve processes.
  • Ideal and what-if scenarios can be put in place for contingency or less than ideal situations.
  • Procedures make onboarding new team members easier, quicker and more consistent.
  • Accessible and shared procedures add defined expectations and increase accountability.
  • Documented and implemented procedures improves consistency of the deliverable which can build your brand and increase market share.
  • Having clear processes can help with covering off people or positions in the event of vacations or illness.
  • Documented procedures also help with human resource monitoring by adding specific language to job descriptions and performance reviews.

These and a host of other benefits will be felt by your business from the moment your procedures are documented until the time you choose to sell your business. In fact, having up to date documented procedures is something a buyer will be very interested in and will place a high value on this information when considering the purchase of your business.

Putting in the effort to document all the procedures in your business and keeping them current with regular updates is well-worth the investment of time. Start documenting the key functions and keep working at them until all your processes are done and then create a schedule for review and updates.

We can help you determine your business’s top value drivers and help you build a plan to improve your business’s overall value. If you want to increase the value of your company, connect with us.