June/July 2005: by Darrell Nordstrom

The life of the entrepreneur

If the past 5, 10, 20 or more years of your life included being the owner/operator of a business, you will easily identify with this article.

For many of us our business lives began with an idea that developed from a casual conversation with a friend, on a fleeting interest, that may have been remote at the time but resulted in a life long career.

From the outset, it was about the money - or lack of it - and most of us could relate many stories of creative ways of raising capital through our business careers. The financing issue seems to persist for as long as the business continues and particularly for a growing business. But it's NOT the only issue.

As the business survived and grew a realization sets in that you can't do it all by yourself. The critical issue now becomes "finding good help". These people include qualified employees, managers, and external professional advisors that specialize in the owner/operator business area. It's common knowledge that "putting the right people on the bus" determines the success of the trip. Over time, the owner changes roles from being the hands on technician, to the manager, and eventually to the visionary entrepreneur.

Following the initial accomplishments of success, attention is directed at expansion, marketing, and the competition. Efficient, well-planned, financial growth is a theoretically sound strategy but not particularly easy to execute.

As survivors of the first three issues it is common to assume one more problem - the tax man. Now that profits have occurred it is difficult to achieve the growth and expansion if too large a percentage is diverted to government coffers, particularly when the business exceeds the "small business" tax rate. Arguably the amount of profit going to taxes will be in the 50% range, which increases the difficulty of financing expansion.

Managing the various forms of risk is another fear that occupies a significant amount of attention from every business owner. What happens if we have a major fire, or the owner becomes totally disabled for an extended time period, or worse, dies prematurely?

Regardless of the daily issues that confront all owner/operators of business, the good news is that many flourish and, in fact, provide the majority of jobs in Canada. (More than 50% of employees in this country work for businesses with less than 100 employees). Businesses are a source of profit and wealth creation that dramatically impact the standard of living enjoyed by most Canadians. This leads us to another issue.

Getting on the business "merry-go-round" may have been difficult. Regardless, all successful businesses have survived because they learned to effectively accommodate the many issues on a timely basis. When it comes time to step off that ride the statistics are less than encouraging. Two-thirds of all Canadian controlled private corporations do NOT survive to the second generation and less than 10% make it to a third generation. Perhaps this final "PROBLEM" becomes the most difficult to solve. It includes technical factors such as tax efficiency, financing, successor abilities, time frame, and related matters. It also includes practical considerations such as the planning of retirement activities, health issues, re-location, and related family matters.

From time to time, probably every entrepreneur questions if it was worth the effort. But, most of us would reply with a resounding affirmative because the positives far outweigh the problems. The legacy of success that future generations can enjoy is often a great source of pride and accomplishment that easily justifies the effort.

Stay tuned for the next issue when we will discuss a variety of solutions that many business owners have found to be effective answers to common problems.

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About the author
Darrell Nordstrom, CFP, RFP, CLU, CHFC, is a Senior Financial Advisor with Assante Financial Management Ltd. He can be reached at 1-877-837-3377 or 306-665-3377, or click to email Darrell Nordstrom.

Disclaimer
Please contact a professional advisor to discuss your particular circumstances prior to acting on the information above. The opinions expressed are those of the author and not necessarily those of Assante Financial Management Ltd.

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