Like many owner/managers, you likely do not have the security net of a regular paycheque. And certainly you are never going to get a settlement for dismissal or downsizing!

Here are six principles of success that can help entrepreneurs plan for the future.

1. Look after your personal liquidity

 Have you put all of your future in your business or do you have personal working capital outside the business' bank account for riding out a downturn or worse? If your business is incorporated, consider raising your salary to accumulate personal savings. Set a goal to put away the equivalent of at least six months' earnings in personal savings or investments.

Of course, you should also consider stepping up your RRSP contributions to reduce the impact of income taxes on any additional salary. At the same time, if you are not at the maximum, additional income will increase your RRSP contribution level. Until you need the funds, the RRSP will grow with tax deferred income. If you need to withdraw funds before retirement, the timing and amount of withdrawals can be planned to reduce the tax burden. Alternatively, invest your personal savings in 30/60/90-day treasury bills or other short-term investments that will give you liquidity if you need it.

2. Look after your and your employees' future

Plan for both your and your employees' future. There are a number of methods of achieving this goal such as building up goodwill, setting up a profit-sharing or deferred profit-sharing plan, or creating a strong asset base as a source of income after retirement. You could also provide key employees with the opportunity to buy into the business on either an ongoing basis or at the time you retire. Regardless of the method, looking after your own future and the future of those who work with you will make everyone's business efforts more rewarding and increase overall productivity.

3. Manage information

Maximize computer technology to control and provide the information you need. Make sure financial reports, exception reports and government and regulatory requirements are at your fingertips rather than piled high upon your desk. Set levels of authority and delegate responsibility for processing and approval of transactions. Establish deadlines for reports and transactions to be completed so that you can focus on reviewing data, finding solutions for problems and authorizing transactions above your employees' level of authority. Encourage staff to problem resolve rather than simply problem identify. (Anyone can present a problem. Encourage employees to give you suggested solutions so you have a choice of fixes.)

4. Plan for the unexpected

Ensure the survival of your business in the event of disruption. Not having a partnership or shareholder agreement and provisions for dealing with the impact of changes or disruptions could turn a profitable business into a trash heap overnight. Speak to Logan Katz LLP about the impact on your business if your business partner dies, if you divorce, or if you die. Logan Katz LLP can give you guidance on the appropriate corporate structure as well as the need for shareholder/partnership agreements, buy-out alternatives, and various financing alternatives that can help ensure business continuity and sound estate planning.

5. Invest the company's excess cash

When times are good, work towards creating a reserve of working capital that will work for the business both now and in the future. Review your cash flow over the past few years and determine when excess funds usually accumulate. When your business has excess funds, consider investing in equity or interest bearing investments, even if it's only short term. If you can accumulate a base of excess funds, this can serve as security to negotiate a better interest rate for future borrowings.

6. Know when you need outside expertise

While you know a lot about your products or services, no one can be an expert in every aspect of the business. Assess both your strengths and weaknesses in areas such as computer technology, human resources, business management, research and development and financial planning. Identify where the expertise of an outside contractor could benefit the company and then act on it.

Should you so desire, Logan Katz LLP may be able to provide you with innovative solutions by coordinating our network of highly trained professional advisors with whom we have long-standing relationships.

Whether you are starting out in a new business or affirming your commitment to an existing one, these six principles can help pave the road to both personal and business success.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.

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