The thing is, Deans isn’t in the tire business. His family sold that company 50 years ago, and his grandfather used the funds to start a chemical firm. When that company was sold, Deans’ father used the proceeds to launch a plastics business. After working in banking and government relations, Deans joined the family firm in 1999 — and later worked with his father to sell it to outsiders. Today Deans runs a publishing and consulting firm, Détente Financial Press. “I’m a fourth-generation family business,” he says proudly, “but I’m not carrying on anything that represents the family name.”

His attitude is markedly different than that of most business families, who strive to pass their companies to succeeding generations. The problem with that approach is that it’s so hard to do. According to the Canadian Association of Family Enterprise, only 30% of family businesses successfully pass to the second generation — and just 10% make it to the third.

But this dismal record doesn’t stop business owners from trying to pass on their businesses. A plethora of consultants and family business research centres have sprung up to help them beat the odds.

To Deans, this is pure hooey. When the odds are so high against success, he says, why fight them?

The problem, he says, is that most businesses are “gifted,” at least in part, to the next generation. Mom and Pop subsidize the cost because, well, what kind of parents wouldthey be if they charged their kids retail? But such kindness can destroy businesses, says Deans: “Gifting the family business is dangerous to your financial health.”

When you acquire a subsidized business from your parents, the baggage that comes with it can ground a 747. Mom or Dad may expect a continuing say in the business. They can block needed changes, whether it’s firing an underperforming employee, or selling off part of the business. Their “generosity” may force incompatible siblings to work together, compel their children to run a business they don’t want or prevent innovation.

Deans’s solution: the family business should never become more important than the family. It should always be for sale.

Fittingly, that concept was handed down to him by his father and grandfather, who refused to burden their heirs with unwanted businesses. Their “start and sell” approach meant no one was forced to go into a business they didn’t enjoy and no sibling was favoured over another. If adult children wanted the family business, they could buy it on the open market.With this approach, what gets passed on to succeeding generations is not a business that some want more than others, but an even division of cash, and a legacy of business success. In essence, the family is passing on a set of values.

Deans is passing on his own values through a new book, Every Family’s Business, which conveys his controversial message through a simple storyline: a conversation between two family business survivors who meet on a flight to Barbados. It’s a breezy tome that he hopes every member of a business family will read in order to rewire their concept of what makes a family business successful.

How do you put Deans’s philosophy into practice? Here are a few pointers:

• Don’t fall in love with the family business. Plan for your exit. “Start at the end and work backwards.”

• Make sure everyone in the family knows the business is always for sale. Anyone in the family can have it — or no one.

• Be professional. Conduct a SWOT analysis (strengths, weaknesses, opportunities and threats) of your business once a year to understand what needs to change. If family members join the business, conduct formal performance reviews.

• Communicate! The kids must understand the parents’ plans for the company, and the parents must know which kids (if any) want to get involved. “Silence destroys wealth and relationships,” says Deans.

• If an heir wants to buy your business, charge market value. “When all family members understand there is no family discount on shares, there’s nothing to be jealous of.”

• Pull money out of the company. “Get those retained earnings into the hands of wealth managers who can spread the risk around,” says Deans. This also makes the business more affordable for anyone wishing to buy it. m

“People throw away hundreds of dollars” by losing receipts and forgetting to record potential tax deductions, laments Linda Chu, a professional organizer in Vancouver. And that doesn’t include the time you waste sorting through messy desks and impenetrable filing systems.

Mandie Crawford, a former police officer turned small-business consultant in Calgary, says running your own business is much like police work: “The job may be fun, but the paperwork will kill you if you don’t do it right.”

Unfortunately, recognizing the problem doesn’t mean you can fix it. Two-thirds of respondents to a recent Office Depot survey admitted they don’t know how to get organized or stay that way.

It takes systems to turn entrepreneurs into administrative whizzes. Enter a new breed of professional organizer who will come to your home or office to help you create procedures for controlling clutter. “Organizing is a growth industry,” says Chu, founder of Out of Chaos Inc. and marketing director of the industry association, Professional Organizers in Canada. POC now has 545 members across Canada, up from 100 five years ago. Inspired by such popular home-makeover TV shows as Clean Sweep, much of the industry is geared to consumers. But with the disappearance of secretaries from most companies, organizers are finding there’s plenty to do in business as well—at rates ranging from $45 to $175 an hour.

The POC website (organizersincanada.com) has a “Find an Organizer” page if you’re serious about creating systemic change. But if you would rather do it yourself, here are 10 money-saving tips from three expert organizers.

• “Leverage your time,” says Chu. If you’re not a detail person, hire a bookkeeper to record your expenses and a student to input the names on that collection of business cards scattered over your desk.

• Put receipts for business expenses into a basket or file folder as soon as you get them. If you do that 21 times, it becomes a habit that will serve you forever, says Elizabeth Verwey of Small Office Mentors in Toronto.

• Keep a notebook in your car for recording business trips: date, purpose, kilometers driven. Verwey records every trip, whether business or pleasure, “so I don’t have to remember to do it for business.” (She’s seen the Canada Revenue Agency disallow vehicle deductions for entrepreneurs who didn’t keep detailed logs.)

• Where to put your receipts when traveling? “Baggies are your friend,” says Chu: use plastic sandwich bags to keep receipts together. Make sure you fill in the details for each expense every day (cab drivers rarely write in the pickup point or destination any more).

• Store old receipts in clearly labeled bankers’ boxes. If you move, “take them with you in your vehicle,” urges Crawford. Three years ago, her mover lost a box containing two years of her records during a move from Hamilton to Calgary. When she was audited by Canada Revenue, being unable to prove those expenses cost her $5,000.

• When buying business supplies online, immediately print out your receipt, says Verwey. That way your deduction won’tget forgotten come tax time.

• Don’t combine your personal and business banking. “If you run your business out of one account there’s never any question about what your expenses are for,” says Crawford. “If the auditors see personal stuff in your business account, they’ll question everything.”

• Go digital. Use small business software such as Simply Accounting or QuickBooks to track your revenue and expenses, says Verwey. The reports you generate will tell you where your business stands all year long, and make tax time a breeze.

• Hire a pro to do your taxes. They know how to claim the maximum deductions—safely. “My accountant has earned me money every year,” says Verwey. “If I did my own taxes, I wouldn’t begin to see all the money that he gets back.”

• Save time by creating email templates for messages you send out more than once. Crawford has 30 templates ready to go for everything from answering frequent questions to politely pointing out that a member’s credit card payment didn’t go through. “There’s lot of things you do over and over again,” she says. “The more you systematize that, the more efficiently you can run your business.”

Many entrepreneurs, though, don’t realize the importance of signing up yet another key player — an insurance specialist. Albert Luk, a Toronto lawyer who works with many entrepreneurs, says life insurance is like a financial Swiss Army knife for the self-employed. It’s a risk-management tool, a way to shelter assets from creditors, and a means of keeping a business in the family.

Luk and other advisers urge business owners to forge close relationships with experienced insurance specialists. You probably won’t find this to be a natural partnership, since planning for disability or death goes against the fierce optimism of many business owners. But if you start looking at insurance specialists as strategic resources, and not as angels of death, you may find they can save you money. At the very least, a good specialist can explain, in plain English, all those complicated insurance options that you’ve never had time to untangle.

Start with basic life insurance. You may already have a policy that pays your spouse a decent amount in the event of your death. If so, that’s great — but if you’re an entrepreneur who has built a sizeable business, you probably need more. When you die, whether it’s because of old age or being hit by a bus, the inheritors of your business will face problems that go beyond heartache. Your death triggers a “deemed disposition” of the business, which means that your heirs have to pay tax on the capital gains that you and the company have (at least theoretically) enjoyed up to that point, even though you haven’t actually sold the business.

The tax bill that results can be a whopper. Let’s say you start a business at 30 and build it into an operation worth $10 million by the time you turn 50. If you died the next day, says Ted Warburton, a partner with First York Insurance in Toronto, your estate would potentially face a $2.3-million-dollar tax bill, based on the current tax rates on capital gains.

Yes, your heirs could ask the bank for a loan to pay the taxes. But Warburton recalls a case where a 48-year-old entrepreneur died — and the bank promptly reduced his business’s credit line by $1,000,000. The lender feared the uncertainties that often follow when the company’s founder passes away.

In such a case, your heirs could be forced to scour the business for cash — which is usually tied up in receivables, inventory and equipment. In extreme cases, your heirs might have to sell the business’s real estate or negotiate a quick sale of the entire company to raise the money needed to pay the taxman. But a hurried sale could result in the inheritors being forced to dump valuable assets at a huge discount. In the example above, the late entrepreneur’s family was forced to sell the business for 50 cents on the dollar. “I’ve seen businesses that have been crippled by this tax,” Warburton says.

If you’re in a similar situation, you could avoid these problems by having your company fund a permanant insurance policy that will pay $2.3-million on your death. The premium wouldn’t come cheap, at about $20,000 a year, but with this kind of insurance the amount you pay will never increase. Especially if you want your firm to remain in your family’s hands, you may find the annual bill (even if it’s not tax deductible) to be a low price to pay for a tax-free death benefit. “It will allow the family or heirs to focus their attention on fixing the business, not selling it or drawing cash out at a horrendous time,” says Warburton. (In fact, your business’s tax bill could be much higher than $2.3 million 30 years from now, based on future growth. Warburton assumes you may look at an estate freeze to lock in the value of your share of the business, and attribute future growth to your children or other heirs — but that’s another column.)

Luk says some entrepreneurs may go further and consider a universal life plan, in which the policyholder pays more into the policy than the death benefit requires. This allows you to build a savings component into your insurance, which offers several benefits. If you’ve maxed your RRSP contributions, for instance, putting funds into your personally owned life insurance policy is another way of accumulating savings that grow tax-free (although your initial contributions are not tax-deductible, as RRSPs are). Better still, should you come out on the wrong end of a bankruptcy or lawsuit, your insurance policy, including the savings component, will remain out of reach of any creditor — unlike your house, bank account, or RRSP.

Now may be a good time to start thinking about such issues. Many forecasters predict a declining economy for 2007. In tough times even healthy businesses can be capsized by the failure of a key customer , and it’s wise to lock some assets away. But don’t wait till the wolves are at the door before transferring your assets into an insurance policy to keep them from creditors. “You have to do it long before any potential judgment, or it can be unwound,” says Warburton. Those who contribute to a universal life policy often put their money into segregated funds, or seg funds, which are the insurers’ version of mutual funds. (The “seg” label comes about because these funds are segregated from the insurer’s general funds). Seg funds offer guarantees: no matter what the market does, if you hold on to your funds for 10 years you’ll get 75% or 100% of your capital back, depending upon the policy. But guarantees cost money, so most seg funds charge annual fees at least a half a percentage point higher than comparable mutual funds.

Depending upon your circumstances, those higher fees may or may not be worth the expense. Bernie Geiss of Cove Financial Planning in North Vancouver, B.C., argues against investing in seg funds, because the management fees are typically higher than similar mutual funds. Investing in other life insurance policies such as universal life and whole life, which are designed to accumulate cash, have other problems. For starters, capital gains are fully taxable when withdrawn from the policy, unlike capital gains earned outside an insurance policy which are taxed at half your income tax rate. As well, investment options are limited and fees are very high.

Instead, Geiss offers his entrepreneurial clients a different way to buy more insurance for less. Through his formula, the entrepreneur buys a universal-life insurance policy, makes excess deposits to the cash account and borrows back an equal amount, investing the money in activities that produce business income. When the cash value compared to the loan has grown to a sufficient degree, the premiums stop. The loan interest, of course, is fully tax deductible.

This structure can eliminate all net costs and make the insurance program cash flow positive. As usual there are lots of ifs, ands or buts, so you’ll need to explore this with an accountant or financial planner at your side.

Since everyone’s needs are different, Warburton urges business owners to sit down with an insurance professional to review their coverage and discuss their goals. That way, he says, “you may or may not ever use these tools, but at least it will be a conscious business decision.”