Study Reveals more than Half of Ontario Small Business Owners do not have a Continuation Plan for Retirement, Disability or Death

TORONTO, Nov. 28 /CNW/ – A recent survey conducted on
behalf of Imperial Life shows that only 42 per cent of small business owners have put a
continuation plan in place in preparation for retirement, disability or death. Of that 42
per cent, 10 per cent could not identify what is in their continuation plan.

“Given that 67 per cent of all small businesses in
Ontario are family- owned and that there are close to a million small businesses in
Canada, the survey results indicate that a significant number of businesses are vulnerable
to unexpected financial and physical setbacks,” says David Machry, CFP, CLU, Senior
Financial Advisor with Finactive, the online division of The Imperial Life Assurance
Company of Canada. “A comprehensive business financial plan that includes a
continuation strategy is absolutely critical to the survival of all small businesses. This
is particularly important when you consider that 14 per cent of survey respondents
indicated that their business would not be able to continue operations if the owner or
primary decision maker were to become disabled for a short term.”

“Overall, the survey shows that many Ontario
businesses are not taking advantage of the tools and products available to them to protect
their investments, employees and families,” says Al Kinch CFP, CLU, CH.F.C. Director,
Elite Case Team at Imperial Life. “In fact, only half of Ontario small business
owners are aware that certain business expenses can be tax deductible. Even those business
owners who prefer to manage their finances independently can benefit from information,
advice and strategies provided by financial advisors.”

The survey revealed that there is low awareness of products
and strategies that are designed specifically to protect businesses and minimize taxes,
such as estate planning, estate freezes and group insurance plans. It showed that although
55 per cent of Ontario small business owners or primary decision makers have an estate
plan, only 54 per cent understand that an estate plan can help minimize the taxes arising
at death. As well, only 46 per cent have made the necessary arrangements to ensure that
their heirs are protected from paying taxes.

“An estate freeze is an extremely effective strategy
designed to allow business owners to leave their business assets to their heirs with the
least amount of tax and possibility of future complications,” says Kinch.
“However, only 25 per cent of Ontario’s small business owners are familiar with the
benefits of an estate freeze, and of those, only half or 12 per cent of Ontario’s small
business owners have made arrangements for an estate freeze with a professional advisor.”

When asked about group insurance plans, 74 per cent
indicated that they did not offer group insurance to their employees. “Many
respondents cited that they assumed they were not eligible for such plans due to their
size, when in fact small group coverage is available on the market, while others admitted
they have never considered group insurance as an option,” says Machry.

The Imperial Life Assurance Company of Canada has developed
a high level of asset management and protection expertise throughout its 104 years of
service to Canadians. Its comprehensive resources and tools to assist Canadian small
business owners protect their business and investments are available through an extensive
distribution network comprised of Imperial Life Managing General Agents, as well as
Laurentian Financial Services brokers across Canada, Finactive certified financial
advisors (1-888-777-0700) and at Imperial Life is part of the
Desjardins financial group with over $80-billion in assets.

The findings released today result from a telephone survey
of more than 500 Ontario small business owners / primary decision makers whose business
has one to nine employees. Conducted by Decima Research, the margin of error for a sample
of this size is +/- 4.38%, 19 times out of 20.

The “Getting Down to Business” Seminar

As part of its ongoing commitment to providing free
financial advice, Finactive is hosting a seminar for small business owners on December 6,
2001, at 6:30 p.m. at their offices, 95 St. Clair Avenue West, Toronto. This educational
seminar is open to everyone, but is designed specifically for small business owners,
entrepreneurs and self-employed consultants who want to know more about tax saving
strategies, health, disability and critical illness insurance and business succession planning.