Critical Questions That You Need To Answer If You Own A Business!

Building a business is hard work. Protecting and preserving it is even harder and overlooked by business owners.

While many owners expect family members to take over the business (69%), very few have actually made plans to make sure their wishes are accomplished (26%), even though they realize the importance of estate and succession planning as is an integrated part of that planning.[i]

A succession plan is complex, time consuming and involves attention to details along with many hard questions which need to be answered for a comprehensive and effective succession plan.  It is also the key element in maximizing the return on the investment of your business. This is the big financial payout, the sale of your business.[ii]


What if a shareholder wants to sell their interests?

  • Is there a right of refusal for the other owners?
  • What are the financing arrangements?
  • What are the recourses if you fund the buyout especially if the funding is over a long period of time?
  • What is the arrangement if the business fails, how will you get your money if you financed the sale?

 Who steps in your shoes if you want out? 

Not everyone has the luxury of leaving a business when and how they want to.  Things like death, disability, and situations are uncontrollable.

  • What are your contingency plans when a trigger occurs (death, health, non-voluntary situations)?
  • Do other members of the firm have access and authorization to use funds to keep the business going if there is such an event?
  • Does your family take on personal obligations for financial notes and loans you have signed personally to fund your business operation?
  • Do you have estate documents and health care directives, should you have a disability or become incapacitated?

Taxes- and the planning for them

 Have you covered the estate tax liability (Federal and State) which you may be exposed to?

  • Where is the cash coming from to pay the government if you are exposed to a taxable situation?
  • Do you have a team of professionals who can work on your estate plan?

 Business structure and correct setup?

  • Different business structures can offer a different tax benefits, are you exposing yourself to forfeiting taxes unnecessarily because of your business type?
  • Are you giving up control under your structure?
  • Is your business organization structure out of date? For example, are you an “C” Corp, but should be an “S” corporation?

 Adequate Buy and Sell Agreement

  • When was the last time you updated the agreement (agreement and insurance)?
  • Is this agreement consistent with your business articles of organization or incorporation papers?
  • What methods have you used to value your business?
  • Have you had a recent appraisal of your business?
  • Does each trigger have a different value?
  • Is your BSA (Buy Sell Agreement) funded with life insurance?
  • At the death of one of the owners, or key persons, will your bank cut off your line of credit, or call it in?

 Selling your business to fill in the retirement gap!


  • Do you have too much wealth in your business creating a tax-trap when and if you extract it?
  • Are you planning to fund a future buyout?
  • Have you considered using business dollars to fund a guarantee payout from your business?
  • Is there a group in your business that would buy you out, or allow you to be a passive owner?
  • Have you ever thought of being a passive owner?

Not planning for a future transition of your business may end of being the worst financial mistake you can make. I would be happy to help you start the process.                                    

[i]Pricewaterhouse Coopers 2016 survey

[ii]The end game is selling your business for much more than you have invested. To do this you need to “work on your business”, and not just in it.

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