All in the Family Magazine by Mario Carr

2013

FAMILY ALL IN THE

Photos of CAFE Members

A Resource for Family Business Sponsored By

SUCCESS STORIES | NEXT GENERATION LEADERS | FAMILY TRUST ACCOUNTS | FIRE DRILLS | SUCCESSION PLANNING

Part of the McGarr Group.

Sally McGarr Realty Corp., Brokerage Independent real estate brokerage celebrates 25 years of serving the Niagara Region and beyond. Year Founded: 1988 | St. Catharines: 905.687.9229 Niagara-on-the-Lake: 905.468.9229 mcgarrrealty.com | st.catharines@mcgarrrealty.com niagara@mcgarrrealty.com Two Locations: 5 St. Paul Crescent, St. Catharines 1615 Niagara Stone Road, N.O.T.L

By Scott Leslie

ally McGarr has been “thinking pink” for 25 years now. The owner and operator of Sally McGarr Realty Corp. first introduced her distinctive rose pink signs when she opened for business back in 1988. Her signage has not changed—and neither has Sally’s commitment to providing a personal brand of service, the kind that is harder to find with the big real estate franchises these days. “People prefer to deal with someone they can trust,” Sally explains, “someone who can make their life easier. The real estate process can be a challenging one. We want to make things as simple and stress-free for our clients as possible.” One of the largest independent real estate firms in the Niagara Region, Sally McGarr Realty Corp. deals in a wide variety of properties across Ontario—everything from farms, homes and condos to commercial and rental units. Her long established slogan says it all: “Cottages to Castles.” The firm is

All in the Family 2013

also a proud member of the Niagara Association of REALTORS®, the Ontario Real Estate Association, and the Canadian Real Estate Association, allowing the McGarr Group to access multiple listing services nationwide. Back to Basics

Sally wasn’t an overnight success story by any means. It all began when she first attained her real estate license back in 1982. After becoming a full broker in 1984, Sally was invited to act as broker to open a new real estate franchise in St. Catharines. She spent the next four years working at this franchise. But it didn’t take long for Sally to realize the franchise mentality didn’t sit well with her. The reason was simple. It was missing that personal element. “It was strictly business,” she says of the corporate brokerage she was at. “There were far too many salespeople coming and going, and everyone was in it for themselves. Buying or selling a home is a very personal experience. It requires a personal approach with people, and that just wasn’t there.”

Sally had dreams of starting up a smaller boutique-style brokerage that would have a more personal touch than the large real estate franchises. “It was time to go back to the tried and true,” she says. After doing some soul-searching and considerable planning, Sally launched Sally McGarr Realty Corp. on December 6, 1988, setting up shop in a newly-renovated home at 7 Duke Street in St. Catharines. Things would start out modestly. At the time, there was just Sally, another salesperson, and two administrative staff. Fortunately, her business began to blossom. Salespeople were increasingly attracted by Sally’s family approach, and her company’s lack of franchise and institutional advertising fees. Referrals began to grow—and so did Sally’s sales force. In January 1991, Sally made the transition to a much larger and higher profile location at 5 St. Paul Crescent. And that pattern of growth has continued well into the new millennium. Today, Sally has eight support staff, 20 salespeople and five people who are currently in the licensing process. Many of them are among the top sales and listing representatives in the region. Over the years, McGarr Realty has also handled the sales and marketing of over 30 new home and condo developments throughout Niagara. “We’re involved with two right now,” Sally

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Sally McGarr, owner and operator of Sally McGarr Realty Corp., Brokerage.

says, “and have another 121 townhome development coming up for sale very soon in St. Catharines. In this development there will be at least 30 freehold bungalow townhomes.” Preparing for the Future

There have been many changes in the real estate field since Sally first started out. The internet has built stronger connections between the salesperson and client, and tools like Facebook, Twitter and blogs have all become industry standards. Sally herself has always been determined to update her business to better serve her clients’ needs. In 2004, for instance, Sally established a second office on 1615 Niagara Stone Road in Niagara-on-the-Lake. In the past year, the McGarr team has also begun listing and selling many rural and farm properties in places like Guelph and Chatham, not to mention cottage properties as far north as Muskoka. Much of their shift into rural properties is due to the recent addition of Sales Representative Dale Petrie who has an extensive connection with 26,000 farmers throughout Ontario. Sally McGarr Realty Corp. has always had a very local presence, particularly with its striking pink signs. But in recent years, the McGarr team has been able to leverage several new national and international connections.

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Three years ago, the firm became a member of AventureTM Realty Network—an organization of Canada’s leading independent brokerages and one of the fastest growing real estate organizations in Canada, covering over 1,400 communities. McGarr Realty is the exclusive affiliate for the Niagara Region. In 2013, Sally also became affiliated with Luxury Portfolio International and The Leading Real Estate Companies of the World (Leading RE). Both organizations are for independent real estate companies only and have representation in over 45 countries worldwide. LeadingRE is the number one real estate organization in the world, outselling any global real estate franchise. Sally feels these connections with independent brokers around the world enable her firm to tap into some refreshing creative thinkers and new innovative ideas. “With our various network affiliations, we now have coverage and connections throughout the world for national and international referrals,” she explains. “It’s really given us a level playing field in which to do business.”

providing a consistency to both the company and the client. For example, Sally’s Office Manager Emma Trozzolo has been working with her since 1982, and treats the company as if it were her own. Sally relies on her expertise daily. At Sally McGarr Realty Corp., their group works closely with one another—something Sally has instilled from the very beginning. “We do a lot of things as a group,” she explains. “We take seminars together, have staff parties, and celebrate one another’s successes. We even have round table discussions Tuesday mornings as a team so we can discuss market activity, mortgage rates and preview our new listings.” A high percentage of Sally’s assignments come through referrals and with good reason. The McGarr Group is well-prepared and incredibly thorough with their research. As dedicated experts in their field, they also have connections with an extensive network of lenders, home inspectors, lawyers, appraisers and insurance brokers. Over the coming year, Sally is looking forward to expanding the size of her St. Catharines office and adding more sales and support staff to accommodate the growth of her business. But when it comes right down to it, Sally isn’t concerned with being bigger. She’s focused on being the best—for her clients’ and staff’s sake. “We want to help people and help them understand the process,” she says. “The more they know, the more they feel in control—and the more pleasant their experience will be with us.” And 2013 is a celebration of the McGarr Group doing the right thing for 25 years. AITF

Keeping It Personal

One of the keys to the success of Sally McGarr Realty Corp. is their reliability. Several of the McGarr Group has been with the firm for 20 years or more,

All in the Family 2013

P rofiles P U B L I S H E R ’ S N O T E ADAM SHIELDS PRESIDENT AND CO-PUBLISHER BUSINESS LINK MEDIA GROUP

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Sally McGarr Realty Corp., Brokerage

Ontario Auto Collision CARSTAR

Beatties Basics Office Products

Dell Smart Home Solutions Inc.

Homes By Hendriks

amily...It’s a very simple word but it’s one that has a great deal of resonance to all of us. It’s the glue that holds us together. It tells us who we are, where we’ve been and where we’re going. It’s also the basis of our latest publication— All In The Family Magazine. Since our company started a decade ago, we’ve had the pleasure of meeting countless individuals throughout the Golden Horseshoe area that are running successful businesses. However, one of the common threads that bind many of these successful firms together is their strong family ownership. This year, we felt it was important to spotlight our family businesses and recognize all the strengths they bring to the table. The enclosed stories focus on the struggles and successes these firms have undergone, and provide tips that will hopefully educate and inspire today’s new generation of business owners. To round out our magazine, we’ve included several articles by financial and legal experts on the issues and circumstances facing many family businesses. You may not know it—but our firm is also a family-run operation. It’s something we take great pride in...just like the publication you hold in your hands. AITF We hope you enjoy All In The Family Magazine.

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Pinder’s Security Products

The William Douglas Group Manulife Securities Incorporated

Peninsula Flooring Ltd.

C.R. Smith Financial

Canadian Association of Family Enterprise

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Mountainview Homes

Rain Tree Roofing

Critelli’s Fine Furniture

Lincoln Hearing Clinic

Flair Kitchen Design

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Whisky Run Golf Club

CroMade Cabinetry

Impression Homes by Mira

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F.E. Coyne Insurance Brokers

Life’s Emergency Training

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reso u rces 6 Start succession planning early 8 In case of emergency…please contact? 10 Grooming next generation leaders 12 Law in family business 16 Passing on the business 22 Who gets dad’s office? 26 Business valuations

Co-Publishers Jim Shields, Adam Shields

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Common family disputes Family Trusts Become a time champion Personal lawsuits on the rise Improve your chance of success Tax planning for the family business Family business, valuations, succession planning

Director of Advertising Julie Shields

Photography Sandra Ozkur Photography Shelly Cameron Photography David Gruggen Photography Publisher The Business Link Niagara Ltd. 36 Hiscott St, Suite 200, St. Catharines, ON L2R 1C8 Tel: 905.646.9366 Fax: 905.646.5486 email: info@BusinessLinkMedia.com www.BusinessLinkMedia.com

All in the Family 2013

Contributing Writers J.R. McAlister, T. Hoxie, N. Smith, S. Leslie, M. Wallace, D. Bruce Q. Wong, L. Lang, C. Miles, C.E. Abela. T.C. Cooper, T. Graves B. McElroy, A. Rowell, B. Horsley Circulation All In The Family Magazine is distributed to approximately 37,000 businesses throughout the Niagara, Hamilton and Halton regions via Canada Post.

Opinions and comments within this publication reflect those of the writers and not necessarily that of The Business Link Niagara Ltd. All advertising accepted is subject to The Business Link Niagara Ltd.’s discretion. The Business Link Niagara Ltd. will not be responsible for damages arising out of errors in advertisements. Any design, artwork, copyright or typesetting supplied by The Business Link Niagara Ltd. is for the exclusive use by The Business Link Niagara Ltd. Any other use not authorized is an infringement of copyright. No part of this publication may be reproduced or transmitted in any form or by any means, without prior written permission of The Business Link Niagara Ltd. Disclaimer: The articles within are presented as a general source of information only and is not intended as a solicitation nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. The publishers assume no responsibility in the correct or incorrect use of this information. For more information on this topic or any other investment or financial matters, please contact the appropriate consultant.

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From left to right: Tony, Guerino, Sam and Remo.

Ontario Auto Collision CARSTAR The Mercanti family has been one of Hamilton’s most trusted collision and glass repair experts since 1961. Year Founded: 1961 | Gage Avenue North: 905.549.4602 Rymal Road East: 905.383.3700 www.oacgage.com | info@oacgage.com info@rymalcarstar.ca Two Locations: 322 Gage Avenue North, Hamilton 1124 Rymal Road East, Hamilton

By Scott Leslie

car accident can be one of the most difficult and stressful times in your life. Fortunately, there’s a collision repair expert out there you can trust to help ease the pain—Ontario Auto Collision CARSTAR. Serving the greater Hamilton region, Ontario Auto Collision CARSTAR is a full service collision and glass repair facility. Family owned and operated, the shop provides complete collision repairs in addition to restoration services like paintless dent removal, detailing, towing service, glass repair, and stone chip protection. Ontario Auto Collision CARSTAR also has audited trust relationships with many prominent insurance firms. The Mercanti family has been committed to

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delivering high quality auto repair service for over 50 years now. Ontario Auto Collision Limited was originally founded on 322 Gage Avenue North in Hamilton by brothers Guerino, Nardino, and Antonio Mercanti back in 1961. Over the years, the Mercantis would take several steps to grow their operation— from operating five family-owned locations to franchising locations. In 1994, the Mercanti family’s two Hamilton repair facilities became the very first CARSTAR franchises in Canada. The second generation of the Mercantis—three brothers Tony, Sam and Remo—would go on to purchase the two Hamilton locations at 322 Gage Avenue North and 1124 Rymal Road East from their relatives in 2005. By becoming affiliated with CARSTAR, the Mercantis have been able to offer a wealth of benefits to

their clientele including competitive pricing, top quality materials, and a lifetime warranty for the life of the vehicle. Having grown up around the auto repair industry, the three Mercanti brothers have set the industry benchmark and know how important it is to provide quality workmanship, quick turnaround times and an exceptional level of service—qualities essential for success. “CARSTAR is approved and equipped to repair all makes and models of vehicles,” says Tony Mercanti, president and general manager, “so we get referrals from all kinds of local dealerships, whether it’s Mercedes Benz, Volvo, Ford Lincoln, VW Audi, Toyota, Mazda or Nissan. They appreciate our quality—and we appreciate their business. It’s not uncommon for customers to be referred from regions like Niagara, Kitchener and the GTA.” Over the years, Ontario Auto Collision CARSTAR has continued to grow in size and reputation. Between the two locations, the Mercantis have 60 employees and service approximately 5,000 vehicles each and every year. The Mercantis have renovated and enhanced their facilities to make them more inviting and conducive to their customers’ needs—and their Gage Avenue location can now efficiently handle commercial fleets. They’ve even made a firm pledge to investing in new technologies like BASF water-based paints, the latest in digital imaging estimating software, and developing electronic links with insurance companies so they can process claims faster than ever. Having highly-qualified technicians on staff is another area where Ontario Auto Collision CARSTAR really outshines the competition. The Mercantis’ facilities have received Gold Class Professional status from I-CAR for their high level of collision repair training. (Both locations are looking to achieve the rare Platinum Class by 2014.) “The driving public needs to know that our facilities will meet and even exceed the new Ontario College of Trades requirements of protecting and creating a public register, ensuring they employ qualified tradespeople,” explains Sam Mercanti. It’s all part of the CARSTAR commitment to making each vehicle repair an easy and painless process. “We use dedicated technicians and state-of-the-art technology to make sure each vehicle is repaired right the very first time,” Remo Mercanti says. “We want to get our clients back in their vehicle and back on the road safely.” AITF

All in the Family 2013

Start succession planning early “Most family business owners don’t build their businesses with selling them as a top priority, but more should.” Provided by argosy partners lIMITED

The Partnership Structure

s an incoming equity partner, Argosy’s private equity funds, The Shotgun Fund and The Succession Fund, typically buy between 35% and 65% of the company from selling shareholders. Although not involved in the operations of the business, Larry Klar said “that Argosy’s nominees to the boards of directors add value on matters ranging from strategic planning, review of management depth and succession to capital structure oversight, assessment of opportunities and risks, the evaluation of possible acquisitions, and maximizing value.” The Succession Fund

The Succession Fund buys shares from selling shareholders in owner-operated businesses, and helps resolve family business ownership transition issues. When business owners want to buy out one or more of their legacy shareholders, or want to sell some of their own shares for succession planning purposes, The Succession Fund facilitates these liquidity ob-

All in the Family 2013

jectives through its “Chips off the Table” solution. Succession planning should be a deliberate process and not a one-time event. Klar said that “business owners should realize that the best time to plan is when you can afford the time to properly evaluate alternatives and seek input from professional advisors. You ideally never want to be forced to accelerate your family business succession because of illness, divorce or death, so it’s always best to plan ahead.” Business succession planning is an investment in the future of your company for the owners, employees and customers. Planning is the key to future success for everyone whose efforts have helped the business to grow. The existence of a succession plan emphasizes your commitment to your company’s long-term growth, and creates confidence among shareholders, lenders, employees and suppliers. What business owners should be considering:

You have various alternatives of course, and some tough questions to answer. Do you want to sell the entire company in due course? Do you want to sell some now and achieve the rest of your liquidity later? Is it

important to you that ownership remain with family members or management? Is the incumbent group of family members or managers even capable of taking over and managing the business? How will they finance the purchase, and can they gain the confidence of lenders, investors, customers and employees? Most family business owners don’t build their businesses with selling them as a top priority, but more should. This involves regularly updating a written strategic plan for the future priorities and direction of your business, candidly outlining both strengths and risks, and creating an organization chart that allows for the evaluation of those senior managers best qualified to meet the company’s challenges. Strive to make yourself replaceable, so the business and managers can grow and prosper without you. The valuation and business review process often indicates that some management depth, capital structure and profitability issues should be addressed before proceeding, not only to support valuation expectations, but to have a more saleable business. Starting succession planning early will ensure an effective process with due consideration to the many issues that family business owners face. AITF Argosy Partners Limited is located at 141 Adelaide Street West, Suite 760 in Toronto. For more information, call 416.867.8090 or visit www.successionfund.com or www.shotgunfund.com.

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FIRE DRILLS

In case of emergency… please contact? By John R. McAlister II

nowing what to do when disaster strikes is something we all hope first responders are prepared for without thinking twice. Army commanders spend weeks and months preparing their soldiers for battle. They drill, and they practice and they drill some more until no one has to think too much when they are called to action—they simply do. If you own a family business or you are the head of a large public enterprise, you no doubt have fire drills and other emergency contingency plans you prepare your employees for just in case the worst happens. As a business owner, you have countless numbers of families who rely on your sound decisions each day to make certain the business continues on a path of success and growth. And do not forget your vendors and your customers who have come to rely on what you produce. They need you too. It makes no difference whether you are the owner of a small business with a couple of employees or one who employs thousands. Every owner I have met thinks about the same things each day. They all worry about market share, making payroll, financing the next big project, etc. As an advisor to business owners for over 25 years, I have heard countless stories of family tragedy and how many of them not only survived but thrived through all of the tumult. By now you are probably thinking of someone you know who owns a business where a disastrous event took place and what transpired. To some of you who are reading this now, this type of tragedy has already struck close to home. So what would happen to your company if this was your last day at the office for six months due to an accident or serious illness or worse still, you were killed? Can you imagine for a moment all the decisions that would need to be made? For starters, when is the last time you reviewed the following documents? Your will and trust agreements. Your business succession plan. Your insurance policies—all of them including property casualty, business, etc. Have you verified ownership/beneficiary designations? Your children’s will(s)—you need to know if you have been named as a guardian for your minor grandchildren and if this is still feasible at your age. Chain of command when you are not around. Bank account passwords, etc. Could your business succession plan pass a “fire drill” exercise? If not, your family, your employ8

All in the Family 2013

ees, and your customers could suffer greatly. I have helped countless family enterprise owners through a fire drill exercise to test the strength of their current documents, their team, and their family members to see if it will stand up against several types of catastrophic events. A partial list includes:

Divorce of a family member. Serious illness or disability. Loss of key personnel (non-family). Death of a major shareholder.

The idea is to put as much stress on the underlying issues we are testing as possible so that the owner(s) can see what works and what fails and how to correct the problems we have identified. In one particular instance, a successful construction company owner of mine asked me to help him pretend his untimely death to test the planning we had put in place about a year earlier. When I asked why he said that a vendor of his whom he had come to rely heavily upon died suddenly and he was witness to the company’s downfall due to family squabbles over—you guessed it—money and control. When I went to visit my client (I will call him Bob) we discussed how he thought he wanted this exercise to play out with his family. Bob said that he wanted to pretend that he died suddenly and that he wanted the entire family present (even the two children who aren’t part of the business). I would be the “master of ceremonies” and he wanted his attorney and CPA to also attend. No bankers or bonding people would be invited in case we found some critical flaws to the business continuity (we did). He wanted this exercise to be as realistic as possible including sharing all aspects of he and his wife’s financial situation. I asked him directly if he wanted everyone present to see everything as this can sometimes be a risky move. His answer without hesitation was definitely “yes” because he felt they were all mature enough to see the details. Bob’s cover was to fly the other family members who did not live close by for a Monday meeting after a weekend family gathering. Attendance was mandatory as some very important financial matters of the family would be discussed. The meeting started with Bob sitting in his usual chair in the boardroom and he was the first to arrive and was not talking or interacting much with his family—anyone present could already sense something was different that day. Mom did not sit next to Bob (this was pre-planned as well). I informed everyone we were there to discuss the future of XYZ Construction Co. because Bob had passed away the night before. I said, “Although Bob is here today and still very much alive, everyone is to act as if he had indeed died.” The look in every family member’s eyes was priceless. Bob’s son Jeff was being groomed as the successor to XYZ and had already been gifted some stock. This exercise was probably the hardest for Jeff that day because his mentor was sitting eight feet away and very much alive. As

we began discussing some critical issues Jeff began to stutter and stammer his way through constantly looking at his mom and then over to his dad. It was painful to watch and about ten minutes into the discussion Bob came alive for a brief moment and sternly said to Jeff that he needed to work through his fears and relax as this was a test of the emergency system just like they have to do before one of their building projects is issued a certificate of occupancy. Bob said nothing else for another hour. As I watched the events unfold here I couldn’t help but wonder how many other families would give nearly anything to have experienced an exercise like this before a tragic event actually occurred. We took the time to diagram the estate and where all of the money would be going and when. The other two advisors and I were amazed at how attentive everyone was to the smallest details in the documents. All the children wanted to make sure their mom would be well taken care of and no one asked about what they were to receive because everyone knew how important XYZ’s survival was to the community. After the meeting was over and everyone present had time to reflect upon the exercise, there were some interesting takeaways that I feel are worth mentioning. The attorney was so impressed with the exercise that he did the same thing with his law partners so that they could witness first-hand the power of the words they write for their clients, and he now does the same type of meeting with his larger business owner clients. The CPA and I both solidified our relationship with the other family members. Bob and Jeff realized that they need to spend more time together and they agreed to meet for lunch every Thursday and to have strategy sessions twice a month. They also determined that they had to stop travelling together in the same vehicle. Bob and his wife were pleasantly surprised that all of their children wanted XYZ to succeed due to its tremendous impact on so many lives. All of the children thanked me and their parents for the meeting and they said they wouldn’t mind doing it again every few years—minus their dad pretending to have died. One of the daughters told me several months later that this exercise was something she would never forget and that when her father or mother actually passed away (hopefully a long time from now) she felt she would be better able to handle it. You have spent a lifetime building your business to where it is today. How would you prefer to be remembered? As someone who built a lasting legacy for generations to enjoy or one who failed to build the foundation necessary for it to thrive long after you are no longer around? My hope for your family is that you want the best for family members you will never meet, but trust me; they will know who you were just like other great leaders in history. AITF John McAlister lives in Roswell, GA (USA). He is president of McAlister Advisory Group. His practice is geared primarily to the closely held family enterprise. He may be reached at john@mcalisteradvgroup.com or 404.276.0628. A Business Link Media Group Publication

Ted Hoxie, President of Beatties Basics Office Products.

Beatties Basics Office Products “What remains steadfast and unshakeable is our practice of treating the customer as we would like to be treated.” Year Founded: 1860 | 1.800.263.4977 | www.beatties.com | customerservice@beatties.com @beatties_basics | Like Beatties Basics Office Products on facebook! Located: 399 Vansickle Road St. Catharines BY Ted Hoxie

ooking back at 150 years of Beatties’ history is a humbling, and an uplifting experience at the same time. I am humbled to be counted among the remarkable people that have been at the helm of this organization. It was my privilege to learn from the best of them, and those lessons have shaped the course of my life with Beatties. And what a life it has been! When I step back and take a look at the company that we’ve created, I’m in awe. The scope, the sophistication, and the esteem we enjoy in the community go far beyond anything Lawrence Beattie could ever have imagined. And best of all, we did it without changing our core values. Our culture is rooted in a tradition that stretches back over a century and a half. The aim of that tradition is simple. Whether corporate or consumer, we want our customers to be customers for life. Every decision we make is geared to that end. We treat every customer as if he or she is our only customer. Consistency and honesty are paramount in our approach. It’s a philosophy that was instilled in me by Lawrence and Rodger Beattie, and in the tradition of the people who have occupied the president’s chair before me. I have made it job one in our organization. As president you are expected to lead, but in order to be successful you have to listen as well. I do A Business Link Media Group Publication

a lot of listening these days. Of course you listen to your customers first. That is a given, but it is my great fortune to have the most loyal and dedicated staff you’ll find anywhere. These are the front-line people. They’re out there where “the rubber meets the road.” I learn from their experience in the field. Their good ideas of today become the company policies of tomorrow. My door is always open to them. Many of our people have been with Beatties 10, 20 even 30 years. They are more like family than employees, and that fact is reflected in their team approach and unswerving dedication to customer service. They are the backbone of the organization. The success I’ve enjoyed over the years is traceable directly to them. Although Beatties is 150 years old, we have always maintained a Niagara focus. Our association with many of our customers goes back decades. We enjoy the familiarity and accessibility of being a local company. It’s good for our customers, it’s good for Beatties, and the spin-off for the local economy is an important bonus. As countless philosophers have pointed out, change is a constant. That is certainly true in our business as we move from supplying paperclips to everything used in the office. What remains steadfast and unshakeable is our practice of treating the customer as we would like to be treated. Beatties has been doing it for the past 150 years, and it’s what we do best. AITF All in the Family 2013

Grooming next generation leaders Work on strategy implementation together. By NEIL SMITH

hen you consider turning over your company to the next generation, you hope that they will enjoy growth of the business and many new successes. How that will be accomplished is the real question to ask. The answer may lie in working together now to define the future direction of the company and working together to implement the plan. Having a business strategy process that you can complete yourself and keep current over time gives you the opportunity to make business strategy an ongoing teaching exercise for the next generation. In the process to set business strategy you will have the opportunity to discuss and review the key drivers for success of your business. However, the best learning opportunity for the next generation is likely to learn how to implement business strategy. Implementation requires a committed effort and is where real value is created for the business. Working through the implementation steps with the new leader can be a valuable experience. The upcoming leader needs to experience the challenges of growing the business and dealing first hand with the obstacles to growth and results. Itâ&#x20AC;&#x2122;s best if they tackle challenges head-on but with guidance as they proceed. Some of real issues for them may be organizational. These issues can involve getting each employee to do a good job, to get teams to buy-in to targets and to get the whole organization to work as one machine with all parts synchronized. The next generation leader needs to know how to run the business and how to change it. Learning to use business strategy to direct the company can be important preparation for them. Work together with them to set strategy and especially to work through implementation. AITF Neil is the president and founder of Vector 17 Strategy Advisors (www.vector17-advisors.com) which helps business owners be hands-on with setting and managing strategy for their companies. Neil was a business owner for over 25 years and during that time developed a simple and practical strategy system which is now offered by Vector 17.

All in the Family 2013

A Business Link Media Group Publication

From left to right: Sarah Snoei, Daryl Klassen, Christine Dell, Jason Dell, Chris Wiens and Stephen Lamers.

Jason Dell, owner of Dell Smart Home Solutions Inc.

Dell Smart Home Solutions Inc. Dell family firm celebrates over 12 years of providing custom home electronics excellence to Niagara—and beyond. Year Founded: 2000 | 905.684.DELL (3355) | www.dellsmarthomesolutions.com @dellsmarthome | Like Dell Smart Home info@dellsmarthomesolutions.com | Solutions on facebook! | Located: 261 Martindale Road, Unit 2, St. Catharines

By Scott Leslie

ason has had a lifelong interest in technology. So when the time came to launch his own business in 2000, there was no question what it was going to be about. He wanted to be Niagara’s go-to expert for custom home electronics. “In the early days, we were dealing with very basic types of systems,” Jason says, “and there was just one employee—me.” But times change, businesses grow and the best ones rise to the occasion. Today, Dell Smart Home Solutions has become Niagara’s leading provider of custom residential electronics. Its team provides everything from home automation, home theatre, lighting control and structured wiring to multi-room audio, in-house communication and advanced security solutions. The Dell Smart Home Solutions team also has years of expertise in several areas including system design, installation, programming, project management, and home technology support. As a member of the Niagara Home Builders

A Business Link Media Group Publication

Association, Dell Smart Home Solutions works with electricians, HVAC contractors, landscapers, architects, builders and interior designers to ensure the most effective and seamless installations imaginable. Dell Smart Home Solutions is also a proud member of the Custom Electronics Design and Installation Association (CEDIA)—a global trade association that specializes in planning and installing custom home electronic systems. All of Dell’s technicians are fully CEDIAcertified. Jason says keeping on top of new developments is critical if they want to succeed in their industry. “The technology is changing all the time,” he explains. “That’s just the nature of the business. We attend vendor training year round, and each fall our team goes to the CEDIA Expo so we can keep up with all the latest developments in home electronics systems.” Many of Dell’s client projects take place in the Niagara Peninsula. But the Dell team routinely works in the GTA, and has also worked on vacation properties as far away as the Cayman Islands. “We mainly work with residential clients,”

Jason says. “We also do some commercial work— usually one of our residential customers that needs a system installed in their boardroom at work.” At Dell Smart Home Solutions, Jason is in charge of sales and business development while his wife Christine takes care of areas like marketing and community outreach. And the Dells’ years of dedication have certainly paid off. The family now has a full technical team of six and sports a state-of-the-art showroom and office location in St. Catharines. In 2008, Dell Smart Home Solutions was named the Niagara Home Builders Association’s Company of the Year for the firm’s dedication to the home building industry. Jason and Christine are currently hoping to grow their staff further and develop an even closer bond with the interior design community. But over the long haul, they keep looking forward to helping their clients create the perfect atmosphere. “It’s just plain fun,” Jason says of their work. “There can be a lot of beauty in a new house—but it’s largely passive. A lot of what we do is active enhancement. By adding a little technology, we can turn a house into a home and make things more exciting for everyone.” AITF

All in the Family 2013

Law in family business “The family business can be a treasure of gold or an albatross around one’s neck.” BY MOIRA WALLACE

amilies have unwittingly been in business for centuries, although the landscape has changed for family businesses. Consider the farmer and his family, who would seed, grow and harvest his crops for sale in the marketplace for income and profit. As society transformed to an industrial based economy, the family business restructured itself to meet those needs. With today’s ever changing family structure and economy, it’s not good enough or even possible to operate the family business based on rules of tradition with only one breadwinner. For tax savings, income splitting and investment profit opportunities, all family businesses should be incorporated, even if only one family member is directly involved in the business. The sole participating member would hold the only voting shares and the other family members are issued dividend bearing shares, which allow for profits to come out of the company and be split for tax savings. Where more than one family member participates in the company, the family business should have a shareholders’ agreement, setting out the various rights and obligations of each voting member. The shareholders’ agreement should define the roles of participating relatives, setting out the requirements to be added as a shareholder or to obtain a greater share in the company, as well as the conditions under which a relative will be released from the company or the company will be sold or shut down. Other agreements will need to be drafted including employment, bonus and any shareholder loan agreements to ensure transparency in the event of a government audit. The division between the business and family is also important in the event of a breakdown in the family or business unit, as the company assets, profits and losses are kept separate and apart from any matrimonial property. The distinction becomes more relevant as both the family and business grows, when non-blood relatives are added to the mix and may have a sense of entitlement or based on their participation, may be entitled to a share of the company. As changes occur in the business and family structure, the shareholders’ agreement should be revisited to ensure its contents continue to be applicable and relevant. Families in business with each other should also document their personal affairs. It makes little sense to clearly define the business affairs and not have it reflected in personal documents like pre-nuptial or co-habitation agreements, wills and powers of attorneys. These documents should define another’s rights and entitlement to manage and receive the company assets and affairs upon the occurrence of a predefined event, which may have a different result than what is legislated in divorce and estates law. Without these documents, even the best shareholders’ agreement may not protect the company from falling in the hands of a disowned, disgruntled, disinterested, divorced or non-blood related relative. Ideally, a family business should survive for generations and be a prosperous venture for all of its participating family members. The family business can be a treasure of gold or an albatross around one’s neck. The best way to ensure it is a treasure is to seek the advice and help of a lawyer, accountant and investment advisor, who will work together to structure the business based on the specific nuances of the family dynamics and involvement in the company. A family business is as unique as the family itself. Legal care should be taken to help the family business flourish for as long as the bloodline prevails and a family interest remains in having the company survive. AITF For all your family business needs, please contact Moira Wallace, BA, MA, LLB, Chief Loophole Advisor and Notary Public at 905.575.0732, email moira@wallacelaw.ca or visit Moira’s website at www.wallacelaw. ca. You can also follow Moira on twitter @loopholeadvisor.

All in the Family 2013

A Business Link Media Group Publication

Homes by Hendriks Award-winning team of builders and renovators bring over 50 years of passion and integrity to every project. Year Founded: 1961 | 905.563.7681 | www.homesbyhendriks.com | info@homesbyhendriks.com @homesbyhendriks | Like Homes By Hendriks on facebook! Location: 4618 Sandy Cove Drive, Beamsville By Scott Leslie

hether you’re looking to build a new home or renovate an existing one, it can be a difficult process trying to find the right builder for the job. You need someone who listens—someone who can understand your needs and bring all your ideas to life. You need Homes by Hendriks. Working on projects all the way from Oakville to Fort Erie, Homes by Hendriks is an innovative builder and renovator, specializing in custom home construction, additions and renovations, and light commercial projects. For years now, Homes by Hendriks has been built on a solid foundation of hard work and fine craftsmanship—not to mention honesty, integrity and dedicated experience. It all began back in 1961 with a young immigrant named Arnold Hendriks. Arnold was busy supporting his family by working at a building supply store. But long-term prospects were dim and the young man dreamed of putting his building talents to better use. Later that year, he did something about it, establishing Arnold Hendriks Building & Remodeling, a small one-man renovations firm. A Business Link Media Group Publication

Arnold’s son Ron would come on board the family business full-time in 1978, having worked side-byside with his father through many summers. Arnold eventually retired from the family business in 1993. But Ron and his wife Yvonne would continue to

From left to right: Darren, Ron and Yvonne Hendriks.

Ron Hendriks has always had a passion for building. And that spirit of dedication also extends to the Hendriks’ son Darren, who is construction and project director. The same goes for each member of the Homes by Hendriks team including Rudi Marinc who has been the Hendriks’ construction manager for more than 20 years. The Hendriks team is one of the most knowledgeable builders around—always learning, always updating their skills through various workshops in order to keep abreast of changes in the industry. And that dedication to quality has resulted in dozens of recognitions for the forward-looking firm including multiple home builder association awards and Tarion Warranty Corporation Awards. As Niagara’s most highly-lauded custom home builder, the Hendriks family recently celebrated their 50th year in business and continue to demonstrate a strong belief in the principles of quality, consistency and integrity that Arnold Hendriks set in motion so many years ago. And now with the third generation of the family business firmly in place, the Hendriks look forward to satisfying their customers’ building needs for years to come. At Homes by Hendriks, making their customers happy isn’t just a way of doing business. It’s a way of life. AITF

guide the renamed “Homes By Hendriks” to new heights. Over the years, the Hendriks’ team of highly skilled designers, builders and tradespeople have built some of the finest homes in Ontario and diversified their operation to include light commercial projects in their repertoire. All in the Family 2013

Greg Pinder and his son Brandon Pinder invite you to visit Pinder’s showroom at 25 Nihan Drive, St. Catharines to view the latest security technologies.

Pinder’s Security Products

The Pinder family has grown their traditional locksmithing business into one of Ontario’s largest independent security firms. Year Founded: 1886 | 905.934.6333 1.800.263.5768 www.pinders.com | pinders@pinders.com Located: 25 Nihan Drive, St. Catharines By Scott Leslie

ack in 1886, an enterprising young man named Bennison Pinder bought a small parcel of land at 18 James Street in St. Catharines for $500 and erected a brick building to house his new locksmith and repair business. Little did Bennison know that well over a century later his modest operation would become a leader in integrated security systems and security hardware. Family owned and operated for over 126 years, Pinder’s offers a wide range of services including locksmithing, access control systems, security safes, video surveillance, wholesale door and hardware supply, high security key systems and contract hardware. Their staff can handle it all—from lock changes and repairs to custom doors and frames to auto openers and fire exit devices to digital locks and intercoms. Pinder’s is one of the largest independent security companies in Ontario with a staff of over 40 lock and electronic specialists. Focused on the commercial, industrial and institutional markets, Pinder’s has worked with everything from universities and hospitals to hydro facilities and heavy industries. Pinder’s supplies and services a full range of products including leading edge technologies in video surveillance, license plate recognition and remote mobile viewing. Other services include e-security access control electronic products. This wide range of latest technologies allows all of its customers and potential clients to create a safe and secure facility and environment. “We’ve been in St. Catharines for over a century now,” says Greg Pinder, the owner of Pinder’s Security Products, “but we’re not ones to rest on our laurels. We have to earn our clients’ business every single day. We have to be ready for anything.” AITF

All in the Family 2013

A Business Link Media Group Publication

Bill McElroy, B.A., C.F.P., CIM, President and Principal of The William Douglas Group and Senior Investment Advisor at Manulife Securities Incorporated.

The William Douglas Group Manulife Securities Incorporated Burlington area benefit consulting and financial planning firm has been proudly serving small and medium-sized businesses since 1998. Year Founded: 1998 | 1.888.522.9494 | www.wdg.ca | info@wdg.ca Located: 101-1005 Skyview Drive, Burlington

By Scott Leslie

hen you need to get your finances under control, it’s important to have an expert in your corner like the ones at The William Douglas Group—a premier benefit consulting and financial planning firm headquartered in Burlington. Founded in 1998, The William Douglas Group has a strong focus on serving the financial and corporate planning needs of the small and medium-sized business community. Over the years, the firm has

A Business Link Media Group Publication

become one of the most highly-esteemed sources of financial solutions and advice in the Golden Horseshoe area. “We work closely with our clients so we can get a better understanding of their situation,” says Bill McElroy, president and principal of The William Douglas Group and Senior Investment Advisor at Manulife Securities Incorporated. “We help them make informed financial decisions so they can build and protect their business—and prepare for the future.” The William Douglas Group can provide indepth assistance with life and mortgage insurance, key person insurance, buy-sell funding, critical

illness and long term disability insurance as well as group benefits and pension plans. Manulife Securities Incorporated offers a wide range of financial products including stocks, bonds, Exchange Traded Funds (ETFs), mutual funds, GICs, RRSPs, RRIFs and LIFs. Manulife Securities Incorporated can also offer executive financial planning, retirement planning and succession planning services. Many firms in today’s market offer a variety of financial solutions. But the team at The William Douglas Group has always prided itself on its commitment to putting their clients’ needs first. “We’re committed to delivering the very best group benefit and savings plans available for our clients,” Bill says. “We strive to provide exceptional personal account management and professional services that are best suited to each company.” One big reason behind the success of The William Douglas Group is the firm’s decades of experience in offering benefit and financial guidance. Bill has over 20 years of experience; he started in the financial services business in 1991 and attained his Chartered Financial Planner designation (CFP) from the Canadian Institute of Financial Planning in 1998, and his Chartered Investment Manager designation (CIM) from the Canadian Securities Institute in 2013. Over his career, Bill has written articles that have appeared in numerous business and industry publications. At The William Douglas Group, Bill has also surrounded himself with a highly-qualified team of individuals including Associate Advisor Tony Bostock, Office Manager Ute Potticary and Executive Assistant Kaitlynn Reid. “We have a wealth of expertise in our respective fields,” Bill says, “and if we don’t offer a service, we have built a strong team of ‘strategic partners’ that can. That way, our clients are assured of getting the best solutions possible.” With its knowledgeable professionals and complete range of products and services, The William Douglas Group has the ability to meet any financial need. “When it comes to their finances, people need to know they’re being well-protected,” Bill explains, “and we’re committed to providing that security for years to come.” AITF

Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund.

All in the Family 2013

“The value of business succession planning cannot be underestimated given that about $1-trillion of business assets could be transferred to the next generation in the next decade.”

Passing on the business to the next generation Survey results on small business succession planning. By Doug Bruce and Queenie Wong

he baby boomer generation of small and midsized business owners is fast approaching retirement. As a result, there is going to be a massive turnover of business ownership and assets in Canada within the next decade. A business succession plan is key to facilitating this process. While about half of business owners have a succession plan, more planning is required to ensure a smooth transition of small business ownership. The value of business succession planning cannot be underestimated given that about $1-trillion of business assets could be transferred to the next generation in the next decade. Since the recession, one third of business owners with a succession plan either delayed or accelerated the date when they expect to leave their business.

as three quarters of all businesses in Canada employ fewer than five employees and more than half of employed Canadians work for a small or mid-sized business. Currently, the SME sector contributes approximately half of the Canadian economy. Just how prepared are SME owners in succession planning? Based on CFIB survey data, over half of SME owners do not have a succession plan (see Figure 1). About 40% of business owners have an informal plan. Only 9% of owners have a formal written plan. This report addresses current obstacles and opportunities to business succession planning. If SME owners can be better informed and guided through the process, there are certainly better chances for a smoother transition.

Introduction

Business Exit Strategy Previous Experience with Succession Planning

The implications of the aging demographic trend in Canada, and other developed countries, has been well documented when it comes to pension, health care and other social policy issues. The phenomenon of thousands of business owners planning to retire and transfer ownership of their businesses will have a major impact on Canada’s economy as a whole. While a massive transfer of business ownership and assets is inevitable, Canada is not quite ready for the change. Succession planning is critical to the business owner and the small and mid-sized enterprise (SME) sector. It is a long-term process and not a onetime event requiring high investment on behalf of the business owner. Every business succession is unique. It can significantly affect the future of Canada’s overall economy and job creation potential

For some SME owners, business succession planning is nothing new. In fact, many SME owners have been through succession planning if they have inherited the business through family or have purchased an existing business in the past. One in five business owners purchased or inherited their business from a family member(s) (see Figure 2). Over a quarter of business owners purchased their business from previous owners. Out of the business owners that replaced previous owners, slightly more than a quarter were involved in a succession plan in the past (see Figure 3). However, the majority of business owners (51%) resorted to starting their business from scratch. Given that potential business owners may prefer to start a new venture from the ground up, they

All in the Family 2013

may not consider purchasing an existing business instead. As a result, business owners will be challenged in finding suitable buyers. For SME owners that have either purchased or inherited their business, about one in five business owners were involved in an informal business succession plan. Only 6% of these businesses were involved in a formal written plan. For existing business owners, many may still not see the value of succession planning since they did not take part in the past. Almost three in five business owners that have been involved in a succession plan upon taking ownership/control of their business currently have a succession plan for their business. This is a positive sign that past business succession planning has been constructive and aided business owners in carrying their operations forward. About half of SME owners who were not involved in a succession plan with the previous owner now have a succession plan (informal or formal) for themselves. Some reasons why business owners may not have a succession plan include business owners are not aware of the benefits of such a plan or lack time and resources to plan ahead. Those who have decided to take business succession planning into their own hands may have learned from past experiences and realized that proper planning can better position the business into a sale or takeover upon the exit date. Current Business Owners with Succession Plans Business Exit Timeline

Close to half of SME owners plan on exiting their businesses in the next five years (see Figure 4). This number has increased dramatically from 2006 when more than one third of businesses were in the same position. This shift can be explained mostly by the fact that business owners have aged and that their exit date is now that much closer on the horizon. The majority of business owners that plan on exiting in the next five years are typically those in business for at least 11 years and those aged 50 and over. Looking ahead ten years, slightly more than three quarts of owners intend to exit their business. To put this into perspective, Canada’s SME sector will face a massive transfer of business assets—about $1-trillion—to a new generation of owners. Business succession planning is the one way to ensure that this substantial transfer of wealth takes place effectively and promotes a strong business sector. Reasons for Exiting Business

Over four in five SME owners will exit their business due to retirement (see Figure 5). The difficulty in selling off a business is problematic since most business owners rely on the sale of their business as the main source of retirement income. Another 13% of business owners (mostly those under the age of 50) plan on moving to another business venture. A Business Link Media Group Publication

Figure 1

Figure 2

Existence of business succession plan by current business owner (% response)

How business owners acquired ownership/ control of current business (% response) Spun-off from another business 3% Transferred from family member(s) 6%

No 51%

Yes, an informal plan 40%

Started business from scratch 51%

Purchase from family member(s) 14%

Figure 3

Existence of business succession plan by previous business owner (% response) Yes, a formal written plan 6% No 59%

Don’t know 14%

An informal plan (i.e. unwritten) 21% Purchased from previous owner(s) 26%

Yes, a formal written plan 9%

Figure 4

Expected business exit date (% response) Within 12 months 10% Don’t know 6%

Figure 5

Reasons for exiting business (% response)

Figure 6

Methods for exiting business (% response) Wind down (close) the business 5%

Retirement 85% In the next 1 to 5 years 38%

Other 5%

Move on to another business venture 13%

Sell to buyer(s) unrelated to my family 48%

Don’t know 5% Other 6% No suitable successor 6%

More than 10 years from now 17%

Business is not profitable enough 5% No potential buyer 3%

Sell to family member 18%

Start full-time employment elswhere 2%

In the next 6 to 10 years 29%

Method of Exiting Business

Almost half of SME owners plan on selling to a buyer or buyers unrelated to them (see Figure 6). Over one third of them intend on selling or transferring to their family members. About 5% of business owners will wind down their business while another 5% of business owners do not have a plan. Ultimately, business owners will need help finding potential buyers since the majority plan on selling to an outside buyer. Similar assistance is required for those passing their businesses on to family members. Details of Succession Plan

A succession plan helps business owners deal with complex topics (see Figure 7) such as tax issues (60%), require qualifications and skills of successors (56%), legal issues (49%), how the successor will be trained/ prepared for the role (46%), and mechanics for the purchase or transfer (45%). Formal business succession plans serve an important purpose which cannot be replaced by informal plans. Critical issues such as tax or legal matters A Business Link Media Group Publication

Don’t know 2%

should be addressed in written form and reviewed by professionals. Such details if left unformalized can be detrimental when the business owner leaves the business unexpectedly. Compared to informal plans, formal written succession plans tend to incorporate more frequently issues that include mechanics for the purchase or transfer of a business, a process for resolving disputes during the transition, and a timetable. While formal succession plans are able to help business owners prepare for many of the obstacles upon exit, business owners must continue to actively monitor and assess their plans to ensure they remain relevant and timely. It is essential that business owners revisit their plans regularly to incorporate changes in personal or business circumstances. AITF Doug Bruce is the vice-president of research and Queenie Wong is

Transfer to family member(s) 19%

Figure 7

Succession plan details (% response) Tax considerations 60% Required qualifications and skills of your successor 56% Legal considerations 49% How the successor will be trained/prepared for the role 46% Mechanics for the purchase or transfer 45% Financing for the successor 43% Roles of other key members of the business during transition 40% A timetable (e.g. date of official transfer) 26% Process for selecting successor 25% Process for resolving disputes during the transition 16%

a senior research analyst for the Canadian Federation of Independent Business (CFIB). For more information about the CFIB, please visit www.cfib-fcei.ca. All in the Family 2013

From left to right: John Dyck, Michelle Neudorf, Lloyd Redekopp, Wendy Janzen and Samantha O’Brien.

Peninsula Flooring Ltd.

Family owned and operated flooring company has 50 years of fulfilling its customers’ flooring dreams. Year Founded: 1963 | 905.468.2135 | www.peninsulaflooring.ca | peninsulaflooring@bellnet.ca Location: 13 Henegan Road, Virgil

By Scott Leslie

eople are always looking for a way to improve the value of their homes— and number one on their list is often having a beautiful new floor. At Peninsula Flooring in Virgil, its professional team is proud to help their customers realize their flooring dreams quickly, easily and affordably. Originally founded by Sieg Wiens back in 1963, Peninsula Flooring is owned and operated by Lloyd Redekopp and John Dyck. Serving residential and commercial customers throughout the Niagara and the Golden Horseshoe areas, Peninsula Flooring is also a member of FloorsFirstTM—Canada’s largest association of independent floor covering stores which has been in business since 1938. Lloyd says their customers are guaranteed to find just what they’re looking for in terms of price and variety. “We have one of the largest selections of carpet, area rugs, ceramic tile, hardwood, vinyl, laminate 18

All in the Family 2013

and cork flooring around,” he explains. “Our showroom has over 8,000 square feet of carpet and flooring on display from brand names like Interface, Centura and Olympia Tile.” Peninsula Flooring prides itself on their years of expertise in the flooring industry and their ability to serve their clients’ every need. “At Peninsula Flooring, we understand that floor covering and upholstery purchases are an important investment and the finishing touch to any home,” Lloyd says. “We take the time to discuss all our customers’ decorating and product requirements. After determining their needs, we’ll offer expert recommendations to best suit them and their budget.” Throughout its long history, Peninsula Flooring has developed a strong reputation for always doing that little bit extra for their customers. For instance, their staff offers free in-home consultations and quotes as well as free shipping to locations throughout Niagara. They even provide after-sales service on all the products they offer.

According to Lloyd, the Peninsula Flooring team is a close-knit group of friends, family, and partners, working together toward a common goal of providing exceptional service to its customers. With 10 installers—each one with over 15 years of experience—and four decorators to help out with colour and product selections, customers can expect only the best from these flooring industry experts. “Our sales staff in our showroom has a real knack for understanding our customers’ needs and ideas for their homes,” Lloyd says. “They have a remarkably good ability to help people pick out just the right flooring and colours to suit their preferred décor.” Experience and reliability have been two of Peninsula Flooring’s most important principles right from the very beginning. However, Lloyd feels their staff commitment to satisfying each customer is the real reason behind their ongoing success. “Most of our business comes through word of mouth,” he says, “and that speaks volumes about the quality of the products and service we offer here. We’re committed to bringing new life to our customers’ floors and you can really see that in the final product.” AITF

A Business Link Media Group Publication

C.R. Smith Financial Leading financial services firm has a long history of serving its clients and the community. Year Founded: 1974 | 905.687.4063 | www.smithfinancial.ca | smith.financial@sunlife.com Location: 502 80 King Street, St Catharines

By Scott Leslie

R. Smith Financial has been serving Ontario’s financial services needs for nearly four decades—and that’s a family tradition that sits well with Doug Smith, the company’s owner and operator. Specializing in employee benefits, life, critical illness and disability insurance, as well as wealth management, C.R. Smith Financial has been providing personalized, results-oriented service ever since the company was first established by Doug’s father Chuck back in 1974. “We provide exemplary service and security based on a foundation of integrity, dependability and progressiveness,” Doug says. “There is no better feeling than knowing that our clients are happy with our efforts and our contribution will allow them to enjoy a sound financial future.” Born in Peterborough, Chuck moved to St. Catharines with his family in 1968. Back then, he worked as a financial centre manager for Mutual Life before deciding to launch the Charles R. Smith Insurance Agency. Initially dealing in life insurance

and guaranteed interest / annuity products, Chuck began diversifying into the group benefits market. After graduating from Wilfrid Laurier University and working independently for two years, Doug decided to continue the family tradition and joined his father’s agency in 1989, purchasing half of the business in 1992. “It was a dream come true working with my dad,” Doug says. “I grew up around the business so I lived the pros and cons of the business. There were lots of evening appointments, lots of 60-hour work weeks. But there was also the freedom of flexible hours and knowing you were rewarded for hard work.” Throughout its history, C.R. Smith Financial has maintained its fundamental ideals of trustworthiness, stability and consistency. But serving the community is another big part of the firm’s successful philosophy. “My father taught me the importance of helping others in need,” Doug explains, “and I’m always proud to give back to our community. Our firm has sponsored dozens of local teams and sporting events over the years—from old-timers hockey to men’s basketball.”

Doug Smith with his father Chuck Smith.

Doug’s biggest investment in the community is the Wise Guys Charity Fund—a group of local business people that raise funds for various worthwhile causes. Founded by Doug and his father over 20 years ago, the Wise Guys Charity Fund holds a week of fundraising events each July. In 2013, the charity will surpass over $2-million raised which has been donated to dozens of local charitable organizations. Doug’s father Chuck retired from the family firm in 1997 and stepped down from managing the Wise Guys Charity Fund in 2001, although he remains the honorary chair. But Wise Guys continues to be a family affair in more ways than one. Doug’s sister Kerry Fast, niece and nephew Ally and Jay, and sons Thom and Alex, have all become active in the Wise Guys cause. Doug says his sons may be taking on a role in the family firm somewhere down the road. In the meantime, C.R. Smith Financial looks forward to looking after its clients’ needs and delivering the best service possible. “When it comes to their finances, people need to know their future and their families’ well-being are protected,” Doug says. “We’ll continue providing that security and exceeding our clients’ expectations for years to come.” AITF

From left to right: Debbie Pratt, Doug Smith and Cindy Haines. A Business Link Media Group Publication

All in the Family 2013

CAFE headquarters in Oakville. From left to right: Sheila Simms, Office and Communications Coordinator; Emma Ramos, Managing Director CAFE Central Ontario; Lorraine Bauer, Managing Director; and Paul MacDonald, Executive Director.

CAFE

Canadian Association of Family Enterprise

Helping Business Families Succeed Year Founded: 1983 | 905.337.8375 1.866.849.0099 | www.cafecanada.ca | info@cafecanada.ca @cafecanada | Location: 465 Morden Road, Suite 112, Oakville

ost people would be surprised, if not shocked, to learn that an estimated 80% of all businesses worldwide are family-owned and operated and account for a whopping 70-90% of global GDP1. Alarmingly, recent studies suggest that owing to the aging of the baby-boomers, half of all family businesses will transition to the next generation within

All in the Family 2013

the next five years. Needless to say, if these transitions are not handled properly the impact on the Canadian economy could be profound. Family businesses involve a unique and complex interplay of family, management, and ownership which presents both opportunities and challenges, and sometimes conflict, particularly as successive generations get involved in the business but have

divergent goals, values and expectations. These issues can be difficult to manage, especially when transitioning the business from one generation to the next. For the past 30 years, the Canadian Association of Family Enterprise (CAFE) has been helping business families manage these challenges. One of the key benefits CAFE offers is participation in Personal Advisory Groups (PAGs) which consist of 8â&#x20AC;&#x201C;12 members from other family businesses who meet monthly to share peer support, experience and advice in an atmosphere of strict confidentiality. In addition to the PAG experience, CAFE offers a variety of educational programs and resources, online forums, workshops, seminars, special events and a national conference all designed to school members on family business best practices. If business families implemented only a few best practices, their chances for successful transition would be greatly improved. CAFE advocates using regular family business meetings and/or family councils to promote communication, and a board of advisors or independent board of directors to give the family access to impartial expert advice. AITF 1

Family Firm Institute, Global Data Points

A Business Link Media Group Publication

CAFE Central Ontario – Helping Business Families Succeed!

n 1983, a group of family business owners formed a network of fellow owners/ participants to help one another meet the special challenges faced by family enterprise, through the exchange of present knowledge and past experience. Recognizing that other businesses could benefit from a similar experience, the Canadian Association of Family Enterprise was formally constituted on December 12, 1983, a not-for-profit association with 15 founding directors. Thanks to the dream, wisdom and commitment of our founders, CAFE has grown to consist of 12 chapters stretching from the coast to coast. Today, CAFE Central Ontario provides services, resources and support to those involved in family enterprise in the Golden Horseshoe area. Membership includes both extended business families and the advisors that counsel them. Our members benefit from three levels of shared experience: Individual experience through online resources:

A Business Link Media Group Publication

Thanks to our advisory members, CAFE has been amassing articles, papers and case studies. These together with archived newsletters make up the bulk of education and information materials for business families. These are supplemented by a growing number of videos and webinars—available only to members. Probably the most common challenge family business members face is isolation—it is often difficult to discuss problems with other family members, and those outside family business often don’t understand the unique dynamics of family enterprise. CAFE’s Personal Advisory Groups (PAGs) meet this challenge head on by providing an unparalleled opportunity to discuss succession, business management, strategy, and family issues with other members of family businesses. CAFE regularly facilitates and hosts workshops, seminars, and webinars featuring the industry’s foremost family business experts and advisors. Through engaging presentations and interactive

discussions, a wide range of complicated topics are covered such as succession planning and implementation, taxation issues and financing, family law and estate planning, ownership transition, selling the firm outside the family, family conflict and rivalry, and conflict resolution and mediation. AITF

The Family Business Forum: A Short Talks Half Day Conference

Twice a year, CAFE celebrates family business by sharing personal stories and a comprehensive agenda geared to our audience of family business leaders. Speakers are all leaders in current trends and best practices in the field of family enterprise. To learn more visit: www.cafecanada.ca/forum.

All in the Family 2013

Advancement potential Advancement desire Interpersonal skills Assessment of the individual compared to the company’s values and leadership competencies Past performance ratings The ability to take risks Decision-making ability Problem-solving ability

Doing this for each potential successor will help you see which ones are best positioned to move the company forward. Finding a successor with the right mix of skills, attitude, drive, character, and experience that matches your business will ensure the family company succeeds for the long term.

Who gets dad’s office? Five tips for family business succession planning By Lois Lang, Psy.D.

hen it comes to family business succession planning, one thing is certain: Most family business leaders don’t do it, they don’t do it well, or they wait to do it until it’s too late. While the CEO longevity in non-family businesses is an average of six years for a family owned businesses, CEOs tend to stay for 20 to 25 years. Sure, that long tenure contributes to leadership stability and consistency, but it can also fuel flat growth, narrow business focus, and decreasing leadership drive. Additionally, when the CEO and other top level executive family members do not step aside in a timely manner, it causes a high level of frustration in the next generation who is ready to charge forward and make their mark. Once it becomes clear that the children might reach their mid to late fifties before taking over, it becomes hard to hold on to the ambitious ones. That’s why all family businesses need to have a solid succession plan in place—one that helps the senior generation leave with ease and welcomes the well-prepared next generation. While succession planning can happen at any level within the organization, we commonly think about the top five to eight key positions for a written, structured succession plan. So, as you plan your company’s future leadership, keep these points in mind.

Think beyond seniority. Many family business executives choose their future leaders based on seniority (i.e. “She’s the oldest, so she will be our next CEO.”). In some families, the next in line is the oldest male. Of course, a single owner can make the easy 22

All in the Family 2013

decision to pass the business leadership to the child of their choice. But this “easy” choice can backfire if the adult child or the one with the most seniority has not gained respect from other family members and employees. In other words, often the easy choice or the obvious choice isn’t the best choice. Therefore, be open to broadening your search beyond the next of kin.

Embrace a more professional process of skill evaluations, performance assessments, and reviews of career history. The more thoughtful, objective, and inclusive the process of bringing on the next leader is the more likely that the transition will be embraced. Succession readiness calls for a written transition plan and an individual development plan for the future CEO within three years of the planned succession date. Implementation of the plan may involve identifying other executive team members with succession needs, building a coaching plan, and providing stretch assignments in different functional areas of the company.

Rank possible successors based on key criteria. Rather than just appoint the next oldest family member to the leadership role, consider creating a list of all the possible successors and rank them from 1 to 10 (with 10 being high) in each of the following areas:

Groom the next generation. Once you have a successor in mind, offer him/her additional development through such things as job rotations, stretch assignments, additional profit and loss responsibility, and additional exposure to board members and customers. The more emphasis you place on prepping the next leader, the smoother the transition will be.

Consider a non-family leader. When a family business member utters the words, “Let’s consider a non-family CEO,” the first reply is usually a colourful “no!” However, a non-family CEO frequently brings diverse, in-depth experience to drive business growth, bringing professional alliances, partnerships, and strategy opportunities. They can be a great mentor for the next generation of family leaders—often then known as a “bridge CEO” from one generation to the next. While the family may hold all the stock, it is critical to develop a performance incentive that will reward and retain the non-family CEO and an employment agreement that will fairly treat and protect the CEO. Choose who’s next

Thoughtful on going planning for succession is a must for long-term business success and sustainability. Therefore, start now. Develop a clear plan about the succession of senior leader positions including who will be next, when the transition will take place, and how that successor will be groomed to make the move smoother. The more planning you do now, the better the future will be—for you and your family business. AITF Lois Lang is a speaker and consultant with Evolve Partner Group, LLC where she helps organizations become high performance

Past work experience and advancement history Education Geographic mobility, if appropriate Learning agility Prior leadership positions—size and scope of leadership responsibilities

workplaces. Lois works with clients on management succession readiness, organizational/team strengthening, executive coaching, executive compensation design, wage studies and mediated conflict resolution. For more information on Lois’ speaking and consulting, please visit www.evolvepartnergroup.com or contact Lois at lois.lang@ evolvepartnergroup.com or 209.952.1143.

A Business Link Media Group Publication

Mountainview Homes President Mark Basciano and Operations Manager Mike Memme.

Mountainview Homes Family-run homebuilding company has been a leader in design, innovation and service for more than 30 years. Year Founded: 1979 | 905.688.3100 | www.mountainview.com | homes@mountainview.com @mountainviewhms | www.facebook.com/mountainviewhome Located: 3350 Merritville Highway, Unit 9, Thorold

By Scott Leslie

hen you’re dealing with a premier homebuilder like Mountainview Homes, you’re not just another number in a production line—you’re number one. For over three decades now, the Bascianos have worked hard to make Mountainview a force to be reckoned with in the local homebuilding industry, constructing more than 4,000 homes throughout the Niagara Peninsula—everywhere from Fort Erie to Grimsby to Kitchener-Waterloo. In addition to its new home division, Mountainview has expanded its operation to include a full-service construction and property management company. Mountainview is also the only builder in Niagara with a Design Centre. More recently, Mountainview renovated and re-launched the now renamed “Design House”—a 3,000 square foot facility where homebuyers will find an endless supply of home design ideas and accessories—all in one convenient location. Led by President Mark Basciano and Operations Manager Mike Memme, Mountainview has been recognized time and again for its commitment to excellence. In 2012 for instance, Mountainview won the Avid Ratings Award for being among one of the top builders in Canada in terms of customer A Business Link Media Group Publication

satisfaction. The company won three Awards of Distinction at the Niagara Home Builders Association’s 2012 Awards of Excellence. Mountainview was also named Ontario Home Builder of the Year by the Ontario Home Builders’ Association in 2007. The Bascianos have always been firm believers in giving back to their community. That’s why Mountainview has built a solid reputation as “Citizen of Niagara.” A strong supporter of Niagara College, Mountainview has also made major contributions to countless

local causes and non-profit agencies over time. The homebuilding industry has changed a great deal over the years. But the Basciano family remains true to the same principles that have guided them from the very beginning. Design, innovation and service have all become hallmarks of the Mountainview operation. And Niagara homebuyers can rest assured they’ll experience those qualities and more—when they hire the Mountainview team to make all their homebuilding dreams a reality. AITF

All in the Family 2013

Carmen Johnson, owner of Rain Tree Roofing with her team of specialists.

Rain Tree Roofing Family owned and operated roofing firm brings a new perspective to each roofing job. Year Founded: 1989 | 905.510.4366 | www.raintreeroofing.ca | info@raintreeroofing.ca Located: 2186 Mountain Grove Avenue, Unit 220, Burlington By Scott Leslie

armen Johnson spent many years working in the service industry, waiting on her customers’ needs. But she’d always wanted to find a career that would fuel her creativity and still allow her to take care of people. The answer was “Rain

All in the Family 2013

Tree Roofing”—a professional roofing business she launched in 2008 with the aid of husband, Darrell, an accomplished roofing and renovations entrepreneur. Rain Tree Roofing specializes in roof removal, repair and remodeling. Based in Burlington, Rain Tree Roofing has served customers throughout the Golden Horseshoe area including Mississauga, Burlington, Stoney Creek, Hamilton and Ancaster.

The firm can handle soffit, fascia and eaves work as well as skylight, window and door installations. The Rain Tree Roofing team has over 25 years of combined experience in the residential roofing and renovations industry. But Rain Tree Roofing is not your average roofing company. Each crew member goes out of their way to be clean, polite and professional while offering a high quality of workmanship. Carmen prides herself on being hands-on with her customers, often supervising a job or checking with a homeowner months later to see how they’re making out with their new roof. Fully insured and licensed, Rain Tree Roofing is never afraid of doing that little bit extra, whether it’s laying down plywood to protect gardens and railings or reducing and recycling site waste. All installations come backed by a 10-year workmanship guarantee, over and above all standard product warranties. The Rain Tree Roofing team is dedicated to their work, and it shows. Over 90% of their business currently comes through referrals. And it’s a customer commitment that will never change. AITF

A Business Link Media Group Publication

Next year, Critelli’s Fine Furniture will be celebrating its 100th year in business. But there have been many changes since the day Thomas Critelli first opened his doors. In recent years, the Critelli family has continued to expand its show space and even launched Transitions: New Lifestyle Furniture by Critelli—a contemporary furniture store operated by Joe’s sister Misette, and located just moments away. Critelli’s also has two websites at www.critellifurniture.com and www.transitionsfurniture.com where clients can browse the company’s brands at their leisure and enjoy a convenient pre-shopping experience prior to visiting their stores.

Critelli’s Fine Furniture The Critelli family has dedicated itself to providing Ontario with the ultimate in fine-crafted furniture. Year Founded: 1914 | 905.684.8108 | www.critellifurniture.com | sales@critelli.ca Location: 126 King Street, St Catharines By Scott Leslie

ack in 1914, Thomas H. Critelli, with the help of his father, Joseph, opened a modest grocery and hardware store in downtown Thorold. But it was the furniture end of his business that would fuel Thomas’ passion—and create a Critelli family legacy for years to come. Today, Critelli’s Fine Furniture is located in St. Catharines, and boasts one of the widest selections of collector quality furniture and home accessories in Ontario. With five floors of showroom space, Critelli’s offers many of the most respected names in the furniture industry—brands like Stickley, Hancock & Moore, Stressless, and Henredon—not to mention a full interior decorating service, and a world of fabrics and leathers to choose from. Joe Critelli, owner and president of Critelli’s, says clients can be overwhelmed by all the choices at first. However, Critelli’s furniture experts have a wealth of interior design experience to help guide people through their selection and purchase. “Our sales and design team are respectful and eliminate things that aren’t right for their clients,” Joe says. “Our staff helps pick out furniture like it’s

A Business Link Media Group Publication

As time goes by, there’s been talk of the Critelli children joining the family business somewhere down the line. But for now, the current generation is focusing their attention on providing the best possible service to their clients. “Our clients have very discriminating tastes,” Joe explains, “and we’re passionate about finding just the right furniture for them. We give them the opportunity to really express their own personal style—and we’re dedicated to meeting and exceeding their expectations.” AITF

going into their own homes.” Joe says their clients are often underwhelmed by the sameness and lack of quality they find at many of the large furniture chains. Shoppers won’t have that same experience with the Critelli family. At Critelli’s, their furniture inventory is sourced from trusted manufacturers across North America, and imported from as far away as Norway, Italy and Vietnam. The bulk of Critelli’s merchandise is also handmade, built by expert craftsmen who’ve dedicated their lives to making collector quality furniture. “People are always telling us they’ve handed our furniture down to their son or granddaughter,” Joe says. “Our handcrafted furniture is built to last a lifetime. We’re very green in that sense. You won’t find our furniture in a landfill any time soon.” Joe feels his family’s dedication to qualities like comfort, design, durability and fine craftsmanship has helped set Critelli’s apart from the competition for decades. “Every single day, we get to work among beautiful things,” he says, “and some of the finest brands available. The industry in general is price driven—but that’s not the case with us. We’re style and value driven.”

All in the Family 2013

Independent business valuations By Corey Miles BAcc., C.A., C.B.V.

here are a number of circumstances which lead to the need for an independent business valuation. These include the purchase and sale of the business, obtaining financing, the transfer of a business to the next generation and litigation such as shareholder and matrimonial disputes. With the demographic of society changing due to the aging of baby boomers, we are seeing more retirements of the entrepreneurs who have started these businesses, leading to an expanded need for succession planning. In order to avoid potential conflict with the Canada Revenue Agency, a business valuation should be prepared under the standards of the leading authority in Canada, the Canadian Institute of Chartered Business Valuators. There are a number of different techniques used in valuing a business, as no two situations are identical. The three that we will touch on are asset based, income based and market based. In each situation it must be determined which methodology is to be used to arrive at fair market value.

All in the Family 2013

The first method we will discuss is the asset-based method. This can be done on either a going concern basis or a liquidation basis. The asset-based approach will often be used when a business is not generating a significant return on the underlying assets of the business, which could be a situation with a farm that is operating on land with a value that is much greater than the profit being generated. This method is also used in a situation where the business is losing money and unable to continue, resulting in the use of a liquidation approach. The basic premise of the asset-based approach is that the value of the business is the fair market value of the assets less the fair market value of the liabilities. Liquidation calculations will also incorporate the costs of disposition and other professional fees required to wind up the company. An income-based approach can incorporate a number of different methodologies. Those used will depend upon the situation surrounding the entity being valued. In the case of a start-up company that is experiencing fluctuating cash flow from year to year, a discounted cash flow approach will likely be used. This is done as there are not stable cash flows to which you can apply a fixed multiple, so the projected cash flow of the company is present valued to determine the total worth of the company at the valuation date. If the company has had stable earnings that are expected to continue into the future, a capitaliza-

tion of earnings, cash flows or earnings before interest, taxes, depreciation and amortization (EBITDA) may be employed. The multiple applied will vary based on certain factors such as industry, geographic region or other company specific factors. Generally, if there is less risk and/or a greater potential for growth, there will be a higher multiple applied. The market-based approach has limitations when it comes to privately held businesses as there are generally not a lot of comparable company transactions available. It is much more commonly used in valuing public companies due to the availability of information. In its simplest form, this approach looks at the current business and compares to other businesses that are similar in nature and the amounts that they transacted for. These methods are not used in isolation and the valuator will often use a combination of these, in conjunction with certain rules of thumb from the industry, to determine the value of the business. AITF If you have further questions regarding business valuations, please feel free to contact Corey Miles or another financial services specialist at Durward Jones Barkwell & Company LLP. Corey Miles, BAcc., C.A., C.B.V., is a chartered accountant with Durward Jones Barkwell & Company LLP, located at 69 Ontario Street in St. Catharines. For more information, call 905.684.9221 or visit www.djb.com.

A Business Link Media Group Publication

Family owned and operated, the Laufmans’ clinic has become a real breath of fresh air to themselves and their patients alike—for a number of reasons. The hearing aid industry has changed dramatically in the past several years. Many hearing clinics are owned by hearing aid manufacturers. As a result, many clinics promote their own hearing aid brands which can reduce the patient’s selection of hearing products. That’s not the way the Laufmans work. At the Lincoln Hearing Clinic, they carry all makes and models of hearing aids. Hearing aid selection is based on the patient’s hearing loss and lifestyle needs. “We’re an independent family business so we’re not tied down to a particular brand,” Lorraine says. The Laufmans are always hands-on when it

Co-owners Jerry Laufman, B.A., M.A., Reg. Audiologist, CASLPO; and Lorraine Baker-Laufman, Clinic Manager.

Lincoln Hearing Clinic Husband and wife team providing personalized hearing care to the West Niagara community. Year Founded: 2010 | 905.563.HEAR (4327) | www.lincolnhearing.ca | info@lincolnhearing.ca @lincolnhearing | www.facebook.com/lincolnhearingclinic Location: 4413 Ontario Street, Suite 103, Beamsville

By Scott Leslie

n the spring of 2010, Jerry and Lorraine Laufman were looking for a change. For several years, the couple had been working for a hearing clinic franchise. But the small chain had developed into a big corporation and sales targets—rather than service—were becoming the norm. “It was really getting away from serving the patients’ needs,” Jerry explains. “Lorraine and I wanted to get back to basics so we could give our patients the personal treatment they deserve.” The answer? Jerry and Lorraine decided to launch the Lincoln Hearing Clinic that November. Located in Beamsville, Lincoln Hearing Clinic is a full-service hearing centre offering a wide variety of hearing services including hearing aid prescriptions, audiological services, hearing aid sales and A Business Link Media Group Publication

repairs, ear wax removal, custom noise protection, aural rehabilitation, counseling and industrial audiology. The Laufmans provide hearing tests to people of all ages. When it comes to inventory, the Lincoln Hearing Clinic stocks hearing aid batteries and accessories, ear molds, swim plugs, musician ear plugs, monitors and industrial noise protection as well as FM systems and Bluetooth accessories.

comes to serving their patients—and that’s something they take great pride in. “With a lot of chains, appointments are only allowed to go on for so long,” Jerry says. “At our clinic, we provide as much time as the patient deserves. We can come right to their home to service them. That’s something you just don’t see anymore.” Experience is another area where the Laufmans really shine. A registered audiologist, Jerry has been providing audiology and hearing aid services at hearing clinics and health care centres across Niagara for over 20 years. Jerry has also worked for years as a musician, giving him a more well-rounded perspective when he’s treating his patients’ hearing concerns. Lorraine has a strong background in the hearing industry herself, having worked as a regional trainer in the hearing aid sector and taken extensive training in customer service and office management. Hearing aids in Ontario are a regulated device, which ensures consistent hearing aid prices at all hearing clinics. And the Laufmans say that regulation enables the Lincoln Hearing Clinic to compete with the biggest of them. “We can match their price,” Lorraine says of their competition, “but they can’t match our service.” AITF

All in the Family 2013

Common disputes among family business owners By Caroline E. Abela

hose involved in a family business face a unique set of obstacles and responsibilities not encountered in other areas of the business world. Addressing those obstacles, while maintaining and nurturing familial relationships, can be a challenge. This article highlights some frequent disputes or obstacles encountered in family businesses which can result in litigation.

business. Dividing ownership in a business equally among family members regardless of their interest in the company or their competencies often results in unhappiness and litigation. Such shareholders are owners in the business not by choice or hard work but by obligation. Conversely, it is unfair for those who make contributions and dedicate themselves to the business to receive amounts equal to their siblings. Control of the business should be given to those desiring involvement in, and who are committed to, the continuation of the family business. Although an even split will prevent your children from thinking you favour one child over the other, there are other ways to provide equal distribution of worth without jeopardizing familial peace.

Unfair compensation in relation to contributions made Unfair compensation or no compensation is a common complaint in family business disputes. It is also not uncommon for a family business to be used like a bank account for family membersâ&#x20AC;&#x2122; expenses. In order to avoid disputes regarding compensation, it is important to keep salaries and job qualifications separate from monies received as a shareholder.

Favouritism of the matriarch or patriarch towards an adult child Power and money are key motivators in family disputes; however, years of perceived preferential treatment of one child over another is a recurring issue underlying litigation. A shareholders agreement can provide a mechanism for a resolution when there are disagreements. A provision for alternative dispute resolution, such as mediation, can help facilitate a settlement while preserving the ongoing relationship of the family. Although the mediation will not necessarily solve the underlying issue in the litigation, it does provide a forum for family members to be heard, which is ultimately what is needed.

Shareholder wanting out of the family business Everyone has special talents and qualities; however, not everyone can, or should be, the president of the family

Not receiving financial or other information in the family business Shareholders commonly complain that they do not receive financial or other information regarding the family busi-

ness. This can lead to feelings of resentment. However, typically, the business was run in such a manner for years. It could also be that certain classes of shareholders are not entitled to receive certain information. A shareholders agreement can provide a list of the types of documents and information that are required to be disclosed to shareholders. Spousal Disputes Another source of disputes is when a spouse or ex-spouse becomes an unwanted partner in a family business. A solution is for a shareholders agreement to contain a limitation on share transfers. Alternatively, a marriage contract that focuses on the family business shares is important in order to avoid disputes. The above disputes can result in litigation. The available court remedy ranges from the wind down of the family business, a shareholder being bought out, the removal of a director or the sale of the business. In order to avoid the significant costs of such disputes and to help preserve family relationships, a number of steps should be taken. For advice on what steps to take or when disputes are imminent, please contact WeirFoulds LLP. AITF Caroline Abela is a partner whose practice focuses on commercial, estates and trusts litigation. She has appeared as counsel before all levels of courts in Ontario and has also appeared before the Federal

All in the Family 2013

Court of Canada. Caroline has authored many articles and papers. She has been an adjunct professor at the University of Western Ontario and is a regular lecturer on a variety of legal topics. Contact Caroline at 416.947.5068 or cabela@weirfoulds.com.

A Business Link Media Group Publication

Flair Kitchen Design Accomplished custom kitchen design team owner has over three decades of professional design and renovation expertise. Year Founded: 2010 | 905.682.6000 | www.flairkitchendesign.com info@flairkitchendesign.com | Location: 52 Scott Street West, St. Catharines

By Scott Leslie

ee Tokar is creative owner and lead designer of Flair Kitchen Design in St. Catharines—an interior design firm that specializes in kitchens and home renovations. For decades now, Lee and his team have been providing their customers with exceptional craftsmanship and award-winning designs—working on literally hundreds of residential projects. As a trusted renovation expert associated with Trademaster Custom Interior Renovations (a sister company located in St. Catharines), Flair Kitchen Design is maintaining a strong reputation for its creativity, fine workmanship and attention to detail. “We build beautiful kitchens as a dealer for Norcraft Cabinetry of Winnipeg,” Lee says with pride. “They’ve proven to be a leader in the industry and Canada’s number one manufacturer of quality cabinets.” Lee himself has been working as a custom renovation and homebuilding contractor for over three decades including eight years as a custom kitchen designer. He says that wealth of experience has been incredibly beneficial to his clients. But Lee particularly enjoys helping them make their dream kitchen a reality. “Based on the client’s selection of cabinet door style, wood species and finish, we can provide them with the ideal kitchen—at a price that fits their budget,” he says. “We can take care of every aspect of kitchen renovations—treating every client as a fuA Business Link Media Group Publication

ture spokesperson for our professional execution of their project.” Flair Kitchen Design’s specialties include kitchen design and installation, countertops and backsplash, flooring and wall finishes, and appliance installations. The firm has hundreds of cabinet styles and finishes to choose from—all of them 100% Canadian-made. Flair Kitchen Design is also the go-to expert when it comes to structural, plumbing, electrical renovations. Whether it’s updating an old kitchen or giving it a complete makeover, the Flair Kitchen Design team has always been committed to building a solid relationship with each client—from the first phone call to the final touch. Lee offers free estimates and designs at no obligation, providing clients with a complete set of three

Lee Tokar, Creative Owner and Lead Designer.

dimensional drawings so they can see what their new kitchen will look like before the team proceeds with any work. (For greater convenience, Lee can meet with clients in their home or at his design studio on 52 Scott Street West in St. Catharines.) Flair Kitchen Design is committed to earning the client’s trust. It’s a practice Lee has followed ever since he first went into business in 1969 as a home improvement specialist. All written estimates are guaranteed for 60 days, and each new cabinet installed is under warranty for as long as the client owns their home. The Flair Kitchen team takes great pride in delivering the ultimate in quality, experience and selection—and look forward to tackling each new project and design challenge. But at the end of the day, Lee knows from his many years of experience that success comes down to one thing—the customer. At Flair Kitchen Design, many of its projects come in the form of referrals—and that strong word of mouth is earning them the reputation of being one of the most respected kitchen designers around. “I’m from the old school where we put 100% into customer service,” Lee says, “because their satisfaction assures us of continued success in today’s economy, something that is sorely lacking from big business.” AITF

St. Catharines/Stoney Creek: 905.682.6000

All in the Family 2013

Whisky Run Golf Club Twenty-four years and growing! From left to right: Hendrik, Maribeth, Luke, Kevin, Lou and Jessica Nieuwland, pictured here in 1989—the year the golf course opened.

Year Founded: 1989 | 905.835.6864 1.877.835.6868 | www.whiskyrun.com @whiskyrun | www.facebook.com/whiskyrungolfclub golf@whiskyrun.com | Located: 631 Lorraine Road, Port Colborne By Scott Leslie

T From left to right: Lou, Maribeth, Kevin, Luke, Jessica, Hendrik and Olivia.

All in the Family 2013

he Nieuwland family’s golf course started out rather modestly. Lou and his wife Maribeth originally purchased the scenic 135acre property back in 1984, and built the family home there the following year. Looking for new business opportunities, the Nieuwlands decided to launch a new golf course on their property, formally applying for a building permit in 1986. In 1989, when the top left picture was taken, the Nieuwlands opened “The Owl”—an executive nine-hole course lined with mature pine, walnut and cherry trees. They would go on to add two more full length nine-hole courses—“The Fox” and “The Serpent”—in 1992 and 1997 respectively. Last year, they opened the Bootlegger B&B, adding a stay and play to the golf course, and this year an 18-hole “disc golf” course will be opening in early June. There’s no question that family has played a major role in the success of Whisky Run. The Nieuwlands’ four children all spent their summers working on the golf course, and now the three youngest siblings have taken full-time positions with the family business. Kevin acts as golf course superintendent, Luke is pro shop manager, and Jessica is in charge of HR and event management. AITF

A Business Link Media Group Publication

Family Trusts

How you can help your children while enjoying important tax advantages.

The RBC Dominion Securities Family Trust has been structured primarily for the purpose of splitting investment income with low-income family members. The RBC Dominion Securities Family Trust agreement may not be appropriate for some of the other reasons that trusts are established (listed above). You should consult with your tax and legal advisors if you want to set up a trust for a reason other than primarily income splitting.

family trust allows high-income Canadians to save taxes by earning investment income in the hands of children or grandchildren that pay little or no taxes. Although it varies by province, every child or grandchild in Canada that has no other income can earn up to a certain amount of investment income tax-free every year, subject to the income attribution rules applying. A family trust can be established to take advantage of this annual opportunity, while still providing the parent or grandparent with access to the monies funded to the trust. If you have low-income children or grandchildren, there are three major benefits of setting up a family trust:

How income splitting helps minimize taxes There are two reasons why income splitting can help you reduce your family’s tax burden: 1. Canada’s tax system is based on graduated tax rates. A graduated tax rate system means that the higher your taxable income, the higher your tax rate. 2. Everyone in Canada has a tax-free basic personal amount which varies by province. This means a family member (regardless of age) that has no other income can earn the following amounts every year tax-free, subject to the attribution rules: Interest income tax-free up to the basic personal amount Capital gains tax-free up to two times the basic personal exemption amount since only 50% of capital gains are taxable Even higher amounts of Canadian public company dividend income tax-free due to the dividend tax credit

1. Assuming your child or grandchild has no other income, they can earn up to a certain amount of investment income tax-free every year due to their basic personal tax amount. 2. Because you loan money to the family trust, you should not lose access to the loan capital. 3. Investment income earned in the trust can be used to pay for expenses that directly benefit the child or grandchild, such as private school, post-secondary education, lessons and camps.

These two reasons mean that if you are a high-income earner and you can shift some of this income to low-income family members, your family can realize substantial tax savings every year (subject to income attribution rules). As a result of these two factors, if income can be shifted from a high-income parent or grandparent to a low-income child or grandchild, then the family can realize substantial tax savings. A family trust can be established to take advantage of this tax saving opportunity.

What is a trust? A trust, unlike a corporation, is not a legal entity but rather a relationship between the trustee(s) and the beneficiaries. The trustee holds legal title to the property within the trust, and the beneficiary holds beneficial title. Beneficial ownership means that the beneficiary has rights to the property, even though they may not be the registered owner of the property. The trustee must exercise their powers in accordance with the terms of the trust for the exclusive benefit of the beneficiaries. The provisions of the trust are set out in a trust agreement or deed. The trust agreement details the name(s) of the trustee(s), the scope of their powers, the beneficiary or beneficiaries of the trust and how the trust assets are to be managed.

Choosing the right option for you To meet your family’s specific needs, RBC Dominion Securities offers three types of trusts:

By Trevor C. Cooper

There are many reasons why people establish trusts including: Holding assets for minor, disabled or spendthrift beneficiaries until an appropriate distribution date. Income splitting. Privacy. Creditor protection. Probate tax avoidance. Part of an estate freeze transaction for a business owner. A Business Link Media Group Publication

1. RBC Dominion Securities Formal Trust 2. RBC Dominion Securities Family Trust — Discretionary 3. RBC Dominion Securities Family Trust — Age 40 The primary difference between the RBC Dominion Securities Formal Trust and the two RBC Dominion Securities Family Trusts is that the Family Trusts permit the parent to loan monies to the trust with or without interest, whereas any monies contributed to the Formal Trust are considered irrevocable gifts. The demand loan feature of the RBC Dominion Securities Family Trusts allows the parent full access to the loan capital at any time by calling back all or a portion of the loan. As a result of this “safety feature,” the parent is likely more comfortable to fund greater amounts to the RBC Dominion Securities Family Trust than to the RBC Dominion Securities Formal Trust. Greater funding to the RBC Dominion Securities Family Trust may allow the trust to generate more investment income that is subject to little or no tax.

Having said this, by loaning larger amounts to the RBC Dominion Securities Family Trust, there will likely now be more investment income that must be paid to the beneficiaries or used directly for their benefit. You should take this into consideration when determining how much to loan to the family trust. Using a trust to pay for children’s expenses A family trust is a tax-effective strategy to create longterm wealth for your children or grandchildren. However, if structured correctly and documented properly, it may also be possible for the trustee to use some of the trust’s investment income (interest, dividends and capital gains) to pay for expenses that directly benefit the minor child rather than let it all accumulate in the trust. Some types of expenses that may qualify as directly benefiting the child include: Private school tuition. Post-secondary school fees. Lessons.

Camps. Sports equipment. Gifts. Nanny expenses.

If the trustee plans on using the trust’s income to pay for expenses of the beneficiary, the expenses must unequivocally benefit the beneficiary, and the trustee must keep proper records. In some cases where an expense is tax-deductible to the parent (e.g. daycare, some nanny expenses, etc.) it may be more tax-effective for the parent to pay this expense directly rather than have it paid by the trust. Family Trust versus an RESP Many parents and grandparents have contributed to a Registered Education Savings Plan (RESP) in order to save for post-secondary education. Due to the government grant Canada Education Savings Grant (CESG) available with an RESP and the tax-deferred growth within an RESP, saving for a child’s or grandchild’s post-secondary education costs using an RESP is a sound financial strategy for most parents and grandparents. A family trust is not necessarily meant to replace an RESP. However, an RESP has limits on contributions and when and on what expenses the funds can be spent. A family trust tends to be more flexible in terms of funding limits and when and for what expenses the funds in the trust can be used. Therefore, depending on your goals, a family trust can act as a supplement to an RESP, a tax-efficient vehicle to pay for a broader category of expenses for the beneficiary, regardless of age, or as a long-term savings vehicle for the beneficiary. If you are looking for a way to help your children, while enjoying important tax advantages, the RBC Dominion Securities Family Trust may be the right choice for you. AITF For more information, Trevor Cooper, vice president and director, associate portfolio manager can be reached at 905.546.5832 or trevor.cooper@rbc.om. This article is supplied by Trevor Cooper, an investment advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund). This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article.

All in the Family 2013

Shown above is a maple beaded face-frame kitchen with glazed finish. The island is cherry with custom stain, complete with granite countertops.

CroMade Cabinetry Award-winning custom cabinetry firm is committed to creating high end work that’s built to last. Year Founded: 2005 | 905.688.6222 | www.cromade.ca | info@cromade.ca Location: 142 Cushman Road, St. Catharines By Scott Leslie

roMade Cabinetry is in the business of making people’s living spaces come alive. That may sound like a tall order—but then, CroMade has always been one to step up to the challenge. Based out of St. Catharines, CroMade is a fullservice custom cabinetry firm, providing its clients with exceptional craftsmanship and awardwinning design. In just eight short years, CroMade Cabinetry has quickly become Niagara’s first and last choice for high end custom cabinetry, working on numerous residential projects throughout the Niagara Region—and across southern Ontario. “Cabinetry” may be part of its name—but that doesn’t mean CroMade is limited to kitchen cabinets. CroMade can create work for nearly any room in the house—whether it’s home offices, paneled libraries, basement bars, bathroom cabinets and vanities or home theatres. CroMade can even accommodate any style, budget or design requirement. The only real limit is the client’s imagination. Tom Zivcic is the owner and founder of CroMade Cabinetry. Tom is no newcomer to the custom cabinetry field, having honed his skills at countless job sites over the years and worked closely with his father who was a longtime cabinetry installer. In November of 2005,

All in the Family 2013

however, he decided it was time to launch his own cabinetry business. There were other cabinetry companies in his area—but Tom wanted to set his new business apart from the competition. For a start, most cabinet companies deal with outside suppliers or designers—that’s not the case with CroMade. At CroMade, the entire cabinetry process is taken care of in-house by its team of expert cabinetmakers and finishers. (One team handles the design and build work while another team takes care of the sanding and finishing aspects.) CroMade can even manage the entire installation—from start to finish—without any outside contractors. Exceeding expectations is a big part of CroMade’s ongoing success. Every member of its team goes that extra mile—no matter how discerning the client’s tastes might be. For example, CroMade can customize each piece to meet the client’s exact specifications— it doesn’t matter whether it’s in the detailing, colour or dimensions. As the go-to woodworking experts, CroMade has built up a strong reputation in the industry for its exceptional creativity and attention to detail. Over the past decade, CroMade has received several prestigious awards from the Ontario Home Builders Association in the Best Bathroom Design, Best Alternative Room Design and Outstanding Kitchen Design categories.

Tom Zivcic, owner and founder of CroMade Cabinetry.

Through the years, CroMade has also made a big impression on the people that matter most— the clients. The majority of CroMade’s client work comes through referrals with many families and homebuilders turning to its professional expertise time and again. Tom and his team pride themselves on being able to provide the utmost in value and workmanship, and look forward to every assignment that comes their way. It may be an enormous undertaking. But it’s all part of their commitment to making their clients’ home living dreams come true. AITF

A Business Link Media Group Publication

Mira Filipovic, President of Impression Homes by Mira.

Luxury Ensuite

Impression Homes by Mira Upscale custom homebuilder thinks outside the box by developing luxury homes and condos with a woman’s perspective in mind. Year Founded: 1996 | 519.860.5556 | www.impressionhomes.com | mira@impressionhomes.com www.facebook.com/impressionhomes | Location: Serving Southwestern and Central Ontario By Scott Leslie

ira Filipovic believes everyone deserves a home that’s personalized to meet their exact requirements—and with good reason. Mira is the president and owner of Impression Homes by Mira, an upscale custom homebuilder and land developer. Originally based in London, Mira is now expanding into the Niagara Region and looks forward to calling Niagara “home.” Developing unique luxury homes and condos, Mira takes care of every stage of the process—from designing and building to decorating and project management. “For most people, a home is the biggest investment they’ll ever make in their lives,” she explains, “so they deserve the very best. I work closely with each client because I want to help them create a home that meets their needs and lifestyle perfectly.” The homebuilding industry has been in Mira’s blood all her life. Her father Marko was a home painter for over 50 years and her mother Kata often worked alongside with him, cleaning the new homes and preparing them for people to move in. When Mira was growing up in St. Thomas and Tillsonburg, her mother would often bring her along to the job sites. As she grew older, Mira began working sideby-side with her father and mother, helping them clean, sand and paint newly-built homes for varA Business Link Media Group Publication

ious homebuilders. And those early experiences would give Mira a wealth of ideas and knowledge when it came to launching her own homebuilding business in 1996. The most prominent of these principles was Mira’s

expansive walk-in closets, providing larger garages to accommodate family-oriented vehicles like minivans, and developing additional space options for regrouping and distressing. Mira pays close attention to areas like wirings so homes can be outfitted with the latest in appliances and technology. She also designs over-sized laundry rooms that can lend themselves to multiple uses such as crafting and entertaining. Catering exclusively to the female market is a novel idea and one that has garnered Mira a great deal of success in recent years. Mira is currently in the middle of developing Oakridge Heights—a new upscale modern luxury condo site overlooking the Thames River in London. This secluded development features a number of mature trees, a grassy ravine and a nature trail that winds along the river and is within walking distance of nearby Springbank Park. Oakridge Heights also makes extensive use of natural materials, not to mention the finest in workmanship and design. Mira also has plans to begin working on two large custom homes in Niagara along the escarpment. For years now, Mira has been proud to design custom luxury living homes that are helping beautify southern and central Ontario. And with all her success at the local level, Mira is hoping to expand her unique luxury home concepts to many other communities throughout Ontario and beyond. Mira’s love of the homebuilding field led her to establish Impression Homes by Mira. But it was her passion for designing custom luxury living homes for women that has made all the difference with her clients. AITF

Greatroom

desire to pay close attention to the needs of women. In today’s world, women have become household decision makers and Mira is committed to designing luxury properties that reflect their lifestyle. That means putting an emphasis on storage space with All in the Family 2013

Can you become a time champion? Consider the five principles of time champions. By Dennis O’Neill

Planning Time needs to be planned. Time never stands alone. Time requires a result. A purpose-goal—something to gage by. Something beneficial. Productivity. Relaxation. Enjoyment. Giving/helping. Or investment of time with a hope of future return such as getting the proper training or practice of skills so as to become masterful. Masters get a greater return for their time.

Balance Time can have diminishing returns. “All work and no play makes Jack a dull boy.” When Jack works all the time, his payoff from hours worked begins to decline. Balance makes Jack overall more happy and more productive. The 20/80 rule applies to time. We accomplish 80% of our productivity in 20% of our time. After the 20%, shouldn’t we shift to something more productive?

Longevity-developers The only way to gain more time comes from longevity. An investment in physical and mental health can deliver quality of life immediately. Then extended years of enjoyable living and productivity. We all have 24 hours in a day, no more or no less. But, people vary in longevity. Longevity rests partly in our own hands.

Clear Priorities Time champions are effective. Effective means doing the right thing. Efficient means doing things right. Time champions don’t waste time and effort on piddly stuff at the expense of main priorities. Time champions know what not to do. They also know the old saying: “a stitch in time saves nine.” Priorities include getting clear on our core values, the things most important to us. As Roy Disney Sr. said “When values are clear, decisions are made easy.” And then we can quickly get at actions.

Pacing Time champions set time-frames. Deadlines. Time frames and deadlines force us to work at the right pace. Time frames encourage concentration and focus. Time champions don’t procrastinate. They get stuff done. When the time comes to work, they work. Hard. AITF Dennis O’Neill, The Business Growth Coach is located in Niagara-on-the-Lake. For more information on how to grow your business, please call 905.641.8777, email dennis@denisoneillcoach.com or

Personal lawsuits are on the rise! By Tom Graves C.I.P., C.C.I.B.

nfortunately our society is becoming more litigious. Not only are there more lawsuits being initiated than ever before, the amounts being sought are getting higher and higher. Nowadays it’s not unusual for personal lawsuits to seek damages in the two, three and even five million-dollar range. Your home and auto policies already provide basic liability protection. However, if you are presented with a statement of claim that exceeds the limits provided by these policies, an umbrella liability policy might be the answer to protect you in just such a case. As long as the basic limit on your home and auto policies is at least $1,000,000, you will be eligible to increase your protection with a personal umbrella. Depending on your needs or comfort level, you can increase the limits of your personal insurance policies to $2,000,000, $3,000,000 or more in a cost-effective way. A personal umbrella will not only increase the liability limits on such things as cottages, watercraft, all terrain vehicles or recreational vehicles but can also provide coverage beyond that provided by the underlying policies.

This includes limited coverage for: 1. Directors and officers of non-profit organizations including condominium corporations; 2. Personal injury for claims related to such actions as libel, slander, discrimination and wrongful eviction. Finally, personal umbrellas provide worldwide coverage for personal actions with the exception of automobile coverage, which is restricted to Canada and the U.S. As your assets grow, so does your liability exposure. A personal umbrella policy can increase your liability limits at a reasonable cost and give you peace of mind. If you want to buy additional protection for yourself and your family talk to your agent or broker about purchasing a personal umbrella policy. AITF Tom Graves,  C.I.P., C.C.I.B. is the vice-president of operations for The Mitchell & Abbott Group Insurance Brokers Limited. For more information, please call 905.385.6383, toll free 1.800.463.5208 or direct at 905.381.4212. Have a question? Email mail@ mitchellabbottgrp.com or visit www.mitchellabbott.com for further information. The Mitchell & Abbott Group Insurance Brokers Limited is located at 2000 Garth Street, Suite 101 in Hamilton.

visit www.dennisoneillcoach.com.

All in the Family 2013

A Business Link Media Group Publication

F.E. Coyne Insurance Brokers

ation to generation—sticking to its old-fashioned values, and continuing to do the little things like making house calls or being available for clients in the evenings. They also remain up-to-date with technology. Last year they launched their mobile app where clients can directly make claims straight from a smart phone. Nancy Hendriks, Albert’s wife, and their daughter, Meaghann Fierling, are taking over F.E. Coyne’s creative aspects and bringing the brokerage online. This summer they are excited to start connecting with their clients through social media and will also be launching F.E. Coyne’s new website. Family is such an important facet in the F.E. Coyne culture and remains one of the company’s biggest strengths. Many of F.E. Coyne’s employees have been with the company for over 25 years and they have clients that have been with them for over 60 years. At F.E. Coyne you are treated as family, and that’s a personal touch you just don’t get from larger companies. And it has clearly been working. F.E. Coyne is one of the oldest and most respected insurance brokerages in Niagara. AITF

Leading family run insurance brokerage has been serving clients with their personal, commercial and specialty insurance needs for over 100 years. Year Founded: 1910 | 905.735.0970 1.800.461.4694 | www.fecoyne.com | info@fecoyne.com Location: 164 Divison Street, P.O. Box 700, Welland

F.E. Coyne Insurance Brokers, the secret of its success comes down to one thing—offering a personal brand of service you just can’t find with larger insurance firms. For over a century now, F.E. Coyne Insurance Brokers has been one of Niagara’s leading choices for insurance, handling a wide range of personal insurance policies—everything from homes, condominiums, rental and seasonal properties to automobiles, boats and mobile homes. When it comes to commercial businesses, F.E. Coyne Insurance Brokers manages a variety of areas including small businesses, commercial automobiles, fleets, contractors, offices, rental properties and construction sites. The F.E. Coyne team can even help clients out when they need coverage for special instances like hobby clubs, temporary events, liquor liability issues and even travel insurance. F.E. Coyne Insurance Brokers success story all began back in 1910 when Fred Earl Coyne joined Henry Cox’s small real estate and insurance firm. Soon after, Fred purchased Mr. Cox’s company and started what would be a four generation family business. A Business Link Media Group Publication

In the early stages Fred worked alongside with his wife Florence. Family stories rumored that they worked from a desk made of orange crates in the old Woolworth building in downtown Welland. Through the years there were many changes in the F.E. Coyne operation but it remained a place where the Coyne family served the Niagara Region’s families with quality service and the highest standards. In the 1940s, Fred and Florence’s daughter, Elinor, started working for the family company and by the 1970s, Fred Coyne had retired from the company’s daily operations and Francis ‘Bud’ Smith, Fred’s son-in-law, assumed the position of president and general manager. Today, Bud’s son-in-law, Albert Hendriks has assumed the position of president. Albert started working for F.E. Coyne in the 1980s when he married Bud’s daughter Nancy. Since then, Albert has excelled not only at F.E. Coyne but also in the insurance industry. Albert is a past president of Niagara South Insurance Brokers Association and is also a board member of IBAO. F.E. Coyne has remained consistent from gener-

Nancy and Albert Hendriks.

All in the Family 2013

Improving your business’ chance of success By Bill McElroy B.A., C.F.P., CIM

amily businesses form the backbone of the Canadian economy today and yet only a minority of these are successfully passed on to the next generation. In many cases, these failures could have been prevented by taking a strategic approach and thoughtful planning to overcome the hurdles life throws at us. Sophisticated strategies are needed to ensure greater success during the life of a business and in the transition of business ownership. Whether an owner chooses to sell the business, transition to a family member or business partner or to fully dissolve the business, there are many complex issues to evaluate before making a final decision. The William Douglas Group Inc. cares about helping small businesses survive and thrive during these challenging economic times. For over 20 years we have developed strategic alliances with a team of highly qualified professionals with one goal in mind: developing customized solutions that best meet the needs of businesses and their owners. As with any business, family business planning

is a tough proposition. You need to establish a relationship with a good insurance professional in conjunction with proper legal counsel and have an open and frank discussion about all the potential hurdles your business can be presented with. One must discuss death, taxes, disability, divorce, estate equalization, and creditor protection. That prospect is never an easy one and if ignored, these issues can be disruptive to both the business itself and the family involved. Without proper prior planning, many family businesses will fail or be liquidated more often than they are transferred to the next generation. By working with a team of professionals and implementing proper advance planning, you can help guard against the risks associated with a transition. Proper succession planning is a must if you wish to see your business continue with success onto the next generation. Some of the issues we can help your business with are as follows: Assist a small business owner in minimizing

rate-owned insurance. Show you how to use holding companies and

family trusts in business succession and insurance planning. Effectively use key person life insurance and living benefits to protect the business and family members. Construct tax efficient retirement income models within the corporation using various products and concepts. Protect assets from creditors. The end result of working with The William Douglas Group Inc. and its strategic partners is developing and implementing strategic solutions that best meet the needs of business owners. These solutions minimize the tax consequences of ownership transfer and maximize the value of the business assets and retirement income. Please feel free to call us for a no obligation consultation. AITF

exposure to capital gains tax. Bill McElroy B.A., C.F.P., CIM is the president and principal of

sion of the business owner’s estate between children active in the business and those who are not. Demonstrate how to use a shareholders’ agreement in a family business setting.

The William Douglas Group Inc. and the senior investment advisor

Consulting firm provides first aid, CPR and defibrillator training for individuals and businesses. 905.930.7430 | www.lifesemerg.com | info@lifesemerg.com

All in the Family 2013

omissions in shareholders’ agreements. Determine when and when not to use corpo-

Devise a strategy to ensure an appropriate divi-

Life’s Emergency Training

Identify common insurance-related errors and

for his Manulife Securities Incorporated associate office located at 101-1005 Skyview Drive in Burlington. For more information, call 1.888.522.9494, email bill@wdg.ca or visit www.wdg.ca.

By Scott Leslie

athryn Davies is the owner of Life’s Emergency Training—one of southern Ontario’s leading providers of first aid, CPR and defibrillator training for individuals and businesses. Serving everything from construction sites to offices to retirement homes, Kathryn’s firm specializes in one and two-day courses Kathryn Davies with her daughter, Paige. on standard and emergency first aid, public access and home defibrillation training, and automated external defibrillator (AED) use. Life’s Emergency Training also sells a number of medical and first aid products including masks, face shields and AED packages. “People can die or suffer unnecessarily in a medical emergency—particularly when you’re not ready for it,” Kathryn explains. “The important thing is to be prepared. It’s all about cutting the risk.” Life’s Emergency Training serves clients throughout the Golden Horseshoe area and as far away as Cambridge and Simcoe. All of Kathryn’s programs are designed to meet Workplace Safety and Insurance Board standards. They’re also approved by the Heart & Stroke Foundation where Kathryn often works as a facilitator. Training courses can be held either at her office or on the client’s premises. In addition to herself, Kathryn has a team of certified instructors on staff. All of them have decades of experience in their respective fields. Kathryn is also proud to welcome her daughter Paige to their staff. Paige is currently completing her training to be a Registered Practical Nurse. “In many cases, people are coming to us after the fact,” Kathryn says of her clients. “They’ve had a workplace incident and weren’t prepared to handle it— but by then, it’s normally too late. In our business, every second counts.” AITF A Business Link Media Group Publication

where it is taxed at a much lower effective rate. Understanding how much of each dollar earned becomes the stepping stone for effective tax planning and allows the self-employed Owner-Manager to use the brackets to structure their business and financial affairs to take advantage of the various methods. Structure starts with a Canadian Controlled Private Corporation and the share structure / ownership components with it. Think of your corporation as one big tap—spraying money all over the place. If you install three of four different spigots onto the water pipe, you can now control who gets money, when and how simply by opening one of the valves. This is known as “Dividend Sprinkling” and when structured properly and controlled among family shareholders becomes the easiest, most efficient way to share income and minimize taxation. Multiple family shareholders will also allow the family owned business to multiply the Capital Gains Exemption, currently at $750,000 per shareholder, into tax-exempt millions on the sale of the business.

Tax planning for the family business Create a tax plan designed around a family owned business with a little advanced planning. By Alan Rowell MFA, DFA

veryone knows that income taxes are a fact of life. They’re here to stay—but that doesn’t mean that you have to roll-over and accept it. No one knows this fact better that the self-employed Owner-Manager. Tax Planning becomes a family endeavour that is carried out year-round; not just something to think about in April and all you really need to know is when and how taxation is going to bite you. This starts with knowing two basic tables. (see right) Easy to see, the more income you earn, the higher the income tax rate becomes. Tax Brackets are fine and everyone should know them, but real tax planning comes into effect with Effective Tax Rates. Effective Tax Rates show you the amount of actual income tax you will actually pay. Structure In contrast, a Canadian Controlled Private Corporation in Ontario pays only a 15% tax rate on every A Business Link Media Group Publication

dollar earned up to $500,000. The savvy business owner, who also happens to be an employee of the corporation they own, can determine their own rate of pay. So, if you only need a $50,000 wage in order to pay your personal expenses, only take $50,000. Leave the rest of the money inside your corporation

The end result—a tax plan designed around a family owned business that allows for the creation and retention of wealth—and all it takes is a little advance planning. AITF Alan Rowell, MFA, DFA is a tax service specialist and president of The Accounting Place located at 154 Grays Road in Stoney Creek. For more information, please call 905.664.1010, 1.866-938.1010, email info@theaccountingplace.net or visit www.theaccountingplace.net.

2013 Federal Tax Brackets* Federal Income Bracket

Federal Rate

Ontario Rate

Combined Rates

Less than $11,038

$11,039 – $43,561

15%

5.05%

20.05%

$43,562 – $87,123

22%

9.15%

31.15%

$87,124 – $135,034

26%

11.16%

37.16%

> Than $135,034

29%

11.16%

40.16%

> Than $509,000

29%

13.16%

42.16% * Ontario income brackets are slightly lower

2013 Effective Tax Rates Federal Income Bracket

Federal Rate

Ontario Rate

Combined Rates

Less than $11,038

$11,039 – $43,561

11.20%

4.30%

15.50%

$43,562 – $87,123

16.6%

7.52%

24.12%

$87,124 – $135,034

19.93%

11.03%

30.96%

> Than $509,000

26.59%

15.72%

42.31%

All in the Family 2013

Family businesses, business valuations and succession planning A good succession plan is useful to assess the alternatives available in retiring and selling a business. BY BRUCE R. HORSLEY HBA CA CBV

Internal sale: To a son or daughter already working in the business (intergenerational transfer) To a management group or key management employee An employee buyout (ESOP Employee Share Ownership Plan) Keep business and obtain trusted president to run the business External sale: To a third party financial purchaser To a strategic (special) buyer such as a competitor, complimentary business or supplier out of country competitor (complimentary business) wanting to entry level critical mass Via a share offering such as an Initial Public Offering To a private equity firm Liquidation of the assets Refinancing the business and decreasing the funds at risk in the business Who will pay the highest price: Sell to a strategic or special buyer. A special buyer is a buyer that has a special reason(s) why the business may be worth a premium to them versus the value of the business on a stand-alone basis. Examples of some reasons are: 1. Adding a new product line or technology to sell to existing customers. 2. Adding additional customer base to the existing business and discontinuing most of the acquired businessâ&#x20AC;&#x2122; overhead costs. There may be benefits of leading market size, increased market presence or strong growth prospects. 3. Obtaining additional sales volume/client base to put through an existing business, machine/plant with unused capacity, etc. 4. Decreasing the amount of competition in the marketplace. 5. Access to low cost of capital such as a Public Company that has high valuation multiple that it is using to acquire many businesses in the same industry and consolidate the industry. How do you find these strategic (special) buyers In order to find a special buyer interested in your business, it is necessary to perform an analysis to understand your business and what benefits you may bring to a special purchaser, understand your industry and anticipated future changes, understand the operations and background of various industry participants and analyze potential foreign purchasers (competitors) that may be interested in entering this marketplace. Then it is necessary to approach the special buyer with confidentiality agreements appropriately worded to protect the businessâ&#x20AC;&#x2122;s assets. It is possible the special buyers are not interested for various reasons or have other priorities currently on their agenda, such as no capital available for purchase or there are other opportunities at lower prices. It is necessary to obtain at least two special buyers interested in order to convince the special buyers to share some of their premium value with the seller. AITF Bruce R. Horsley, HBA, CA, CBV is the founder of Horsley & Associates Inc. located at 25 Main Street West, Suite 515 in Hamilton. For more information, please call 905.528.4446, email brh@hacbv.com or visit www.hacbv.com.

All in the Family 2013

A Business Link Media Group Publication

The Shields family from left to right: Adam Shields, President and Co-Publisher; Julie Shields, Director of Advertising; and Jim Shields, Co-Publisher.

Business Link Media Group For a decade, this family-run media firm has been offering a wide range of solutions designed to educate, inform and connect the various business communities. Year Founded: 2003 | 905.646.9366 | www.businesslinkmedia.com | info@businesslinkmedia.com @thebusinesslink | Like Business Link Media Group on facebook! Located: 36 Hiscott Street, Suite 200, St. Catharines

BY SCOTT LESLE

rom the very beginning, Business Link Media Group has been committed to staying on the cutting edge of today’s media industry. The story of this innovative firm all began in 2003 when Adam Shields graduated from the Sports Management program at Brock University. After taking a brief look into the job market, Adam decided that working for himself was preferable to working for someone else. With their deep interest in the advertising field, Adam and his father Jim came up with an idea. They would launch a new business-to-business newspaper called “The Business Link.” Over the coming weeks, Adam and Jim would drive around St. Catharines each day and knock

A Business Link Media Group Publication

on all kinds of doors, hoping to garner interest in their new publication. It was a long and arduous process but their efforts weren’t in vain. Their family business began to take off, and Adam and Jim built many strong relationships that would help to solidify their presence in the local business community. A few months following the premiere issue of The Business Link newspaper, Julie Shields (nee Dodge), Adam’s girlfriend at the time, was interested in the business and started her career with the firm that summer. A quick learner and strong salesperson, Julie would become the company’s director of advertising—and an official member of the family. Ever since those early formative days, the Shields family has continued to build Business Link Media Group on family values. They are a family that works with other family businesses

and understand the value of a hard-earned dollar. Always setting their sights on quality rather than quantity, the Shields family understands the Golden Horseshoe and its unique business needs. They pride themselves on running a lean operation, keeping busy and taking inspiration from the many business success stories they spotlight in their publications each month. They understand that the key to any successful business is to tell your story, and tell it well. They’ll stop at nothing to be your business’s cheerleader. By focusing on the everyday successes in the Niagara, Hamilton and Halton regions, the Shields family has strengthened their reputation as your first point of contact for business success. And if they can’t do it, they know the experts who can. As the Shields celebrate their 10th anniversary in business, Business Link Media Group’s platforms continue to educate, inform and connect the business communities of Niagara, Hamilton, Halton and beyond. The firm offers a wide range of newspapers, magazines and specialty publications. Their ongoing publications include The Business Link Niagara, The Business Link Hamilton, The Business Link Halton, All In The Family Magazine, and HWS – Health, Wellness & Safety Magazine for the Niagara and Hamilton/Halton regions. They’re also firmly committed to changing with the times, introducing a Business Link Media Group app, an HWS magazine app, online advertising platforms, social media and video services. The Shields have even launched a brand new division—BL Print Solutions, which offers professionally designed and customized, top-quality marketing materials at outstanding prices. After a decade in business, the Shields family continues to reflect on the lessons they’ve learned. Their success can be attributed to taking chances, embracing changes and looking forward to new opportunities. They understand today’s challenging business climate and are always asking themselves: “What next?” They enjoy staying ahead of the game—but they also enjoy being in the game. If you’re looking to increase your company’s exposure and growing your business, contact the experts at Business Link Media Group. There’s no doubt you’ll be treated just like family. AITF

All in the Family 2013