An income replacement strategy is the plan for how income, dividends, and financial benefits provided by a business will be replaced after ownership is transferred.

For most business owners, the business is not just an asset. It is the primary source of income, benefits, and financial infrastructure. The company car, the health benefits, the expense account, the pension contributions, and income splitting with family members all disappear at exit. The personal financial plan needs to account for all of them, not just the investment income the exit proceeds will generate.

The gap between what the business currently provides and what the exit proceeds will generate, invested at realistic rates of return, is often larger than expected when the numbers are run carefully for the first time. Identifying that gap years before the exit creates time to address it: through additional value building, personal savings, or a revised exit timeline that allows the financial foundation to be more secure before the transition occurs.

Replacing everything a business currently provides requires a plan that goes well beyond the proceeds of a sale. See how Wefinx approaches exit planning.

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