Awareness to succeed!

July 29, 2022 by YOUR BUSINESS WORTH, posted in Selling Your Business, Strategies of growing business, Team, Uncategorized, Valuation, Value drivers, Working On Your Business

This is the video and the narrative to post

This video is a 19-minute quick course which I put together in order .to share with you the biggest mistakes business owners make.

I call this the “Awareness to Succeed,” course.

Owners spend most of their time on their product and services, and employee relations. This takes up much of their time.

However, because of these time-consuming tasks, they are unaware of the other areas of business that should be understood and focused on by them, or at least have an awareness of.

By not having some type of awareness in these areas, they run the risk of being side swiped by some fiscal impact that may have a major effect on their finances, both business wise and personally.

This quick course will make you aware of some of the major areas you need to understand better.

As an owner, you may not have the time to learn all that you need to know about these areas. You will learn that they are especially important and assign a professional consultant to keep you informed of your status and future developments in these areas.

There are many changes coming out of Washington weekly that affect your business. You need a system to stay up on many of the changes. This course is designed to help you understand critical information. Take the 19 minutes to learn more about, Growth, Protection, Equity, and Transition in your business.

Once you complete this course, request a FREE download of my book “Unlocking Your Business DNA,” and subscribe to “Building and Protecting Your Business Worth Podcast.” These are two great areas for learning.

Request The Book: https://www.allclients.com/Form2.aspx?Key=DEC5C5C207C9803747A0458C9EB2D7C6

Subscribe to our podcast.

https://podcasts.apple.com/us/podcast/building-and-protecting-your-business-worth/id1539791693

The Easy Process To Identify and To Solve The Problems!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Income from your business, Inside Sale, Key People_Or Group, Passive Ownership, Selling Your Business, Strategies of growing business, Tax Efficient, Team, Valuation, Working On Your Business

The Easy Process To Identify and To Solve The Problems!

Excerpts from My book, “Unlocking Your Business DNA”

The One Page Solution!

As we start the process of fixing the problems, they need to be identified. In chapter 1, I discussed how the business owner needs to find their “Business DNA”. Again, this is about focus and asking the right questions, and giving the business owners the amount of time, they need to think it through.

I break down the issues into two categories, BUSINESS GROWTH AND TRANSITION.

Business Growth: Focuses on the business itself such as the strategies needed to grow the business, the systems, the culture, and its employees. It is all about the business future.

Transition: Focuses on the categories that relate to the owners, and the changes they need to make in their personal life because the business is growing.

I keep these categories separate because the issues concerning the business growth are different than the owners transition issues. However, as the business growth changes, it affects the transition of the owners, and vice versa.

It is very important that the business owner is committed to fixing their problems. If they are not, the first time they have a business roadblock, they will tend to put planning on the back burner. This is a mistake, because most of the time it does not resurface until there is a crisis.

However, in our planning we do create action plans in small steps. Having a team of advisors working together creates the ability to complete the small steps needed to accomplish our goals.

An Example:

A perfect example was when a company we were working with had plateaued in growth and wanted to create more business growth. When we went through some of the planning questions, I realized the owner had spent no time systemizing their business.

The owner had no documentation of operational systems of his business, but instead it was all in his head. He would delegate the tasks to his employees like a drill sergeant. He never even thought of the fact that there was no continuity in his business, consequently, if something happened to him, the business would have ended.

I asked him, “could you go on vacation for three months and not check in during that time”?

He looked at me and laughed, replying, “are you kidding this place would fold in seven days.”

I replied, at least you are real, the sad part however is you do not have a business, you have a job. You have a position, a paycheck, and a place to go, but you do not have a business.

He looked at me dazed! But he knew I was right.

The Process Using “One Page Solutions”, will keep everyone on track.

To uncover the issues and problems with the business owner we go over the main subjects called “ONE PAGE SOLUTIONS.” On any subject there are always a few directions in which the business owner can go. We discuss them and analyze what are the most important subjects the business owner needs to deal with currently. “THE ONE PAGE SOLUTIONS” ARE LISTED BELOW.

Each Subject has a few sub-topics we review with the owners. As we DISCUSS the One Page Solutions, we find the strategies which will solve the issues. Once we are done with the subject, we move on to the next One Page Solution, if any.

THE FOCUS AREAS of the “One Page Solution” ARE:

1-Sale of Business (outside)/ Evaluation Methods/Timing

2- Inside Transition (Family, Co-Owners, or Key Employee/s)

3-Passive Ownership- Owner wants to still run the business, but take long trips

4-Retirement; defining and preparing

5-Wealth Accumulation & Asset Protection (both in and out of the business)

6-Premature Death- Consequences

7- Estate Distribution- updating

8- Life Insurance Contracts and Benefits

9-Legacy Planning / Management of Legacy

10-Disability and Illness, Medicare, and Medicaid

11-Key Employee Retention- and Creating A Culture

12-Key Employee Owner’s Manual- systematically creating company manual, business coaching, marketing proceedures

13-Corporate Benefits and Retirement- cost and efficiency

14-Qualified Plans and Personal Liabilities- Executive Compensation

15-Family Relationships/Employee Relationships/Human Resource

We helped a business owner recently with the problem of not having business growth over a prolonged period of time. The solution was to put in place strategies that would create transferable values for the future.

They included things like creating key group, documentation, standard procedure, diversification, and growth strategies.

In this case we realized this will take some time to implement. The owner was under no delusion that this will be done in one year. Most importantly the owner started the process. A few years from now he will see the outcomes in all its glory. Because we have experts in our toolbox, we shared our professional advisors with our client for coaching purposes, and education.

Besides implementing a few systems, they will also do a business appraisal every two years. Over a period, this will help them evaluate the growth of their company by implementing the systems suggested.

By doing this the company could allow for better planning in the future, and adjust the path towards financial security, and business growth.

One of the key elements to helping Business owners solve problems is to also identify the roadblocks. This eliminates the surprise factor should our implementation strategy not go as planned. In one of our planning agendas, we discuss these roadblocks and try to define the subsequent issues and challenges in the future.

What is extremely important in this process is that it makes the owner aware of any potential issues they must have to deal with in the future and stay ahead of the problem curve.

Over the years what has been extremely helpful has been the communication with the team. Again, these are the client’s advisors that may or may not have been in place before we started planning. Since we update the team regularly, we are often given new advice that has been helpful in forecasting future events in the business.

We normally would not have this knowledge if we did not have the team of advisors in communication. This is one of the biggest advantages of working with the team and having periodic reviews.

We have been successful helping business owners work on their business to get issues resolved and to focus on details. We use a One-Hour a month system for the business owner to do this. This allows the business owner the brevity they want, but also, gives them quality time to organize the details of their business. Through our step-by-step system, we help business owner cover all the key issues that are needed to cover to run your business smoothly, take more time off, earn more money and just enjoy working and life much better.

If you would like a FREE WHITE PAPER called “Your Business Essential” which will help you organize your business, CLICK THE LINK BELOW, download the white paper. This is a 128-page guide in business planning Your Free. When you click submit on the form, your file will immediately download. Enjoy.

Immediate Download

You can purchase of “Unlocking Your Business DNA”, AT Amazon. All profits to to Wounded Warrior Foundation and other Veteran groups.

Business Owners Essential Planning Tools! Part 2!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, evaluations, Executive Benefits, Funding your Buy and Sell, Income from your business, Inside Sale, Key People_Or Group, Life Insurance Types, Passive Ownership, Selling Your Business, Team, Valuation, Value drivers

Good planning can often begin with owners transferring ownership interest to family members, without giving up control of the business. This type of planning sets the stage for the future passing of the baton and can be highly effective.

The long-term plan of business transition can also focus on who can run the business operations once the senior guard leaves the business. Just because a family member has worked in the business, it does not mean they can run the business effectively.

Business Transition And Succession Planning requires many years to develop the right plan. It starts with finding the right employees to train for the job, and the right people to run the business (this includes family succession situations).

I have found that “Passive Ownership” can be a particularly good possibility for many business owners. They stay in control and slowly give away the duties over time while running the business, but at the same time slowly disengaging from the business. It gives them time to help prepare the junior successor for the job.

The procedure for “Transition Planning” is critical for a long-lasting understanding amongst the family members, both in and out of the business. Without clear communication to the family members, conflict and bad feelings may occur.

Business Succession Planning (Click to receive full report and guide; R-1)

What would happen to the business if one of the partners died?
- Who will buy your interest in the business?
- Will the company, shareholders, or the heirs keep the right to own the shares. Are the party’s mandated to buy your shares?
- Where will the capital to buy the shares come from?
- Do you want the deceased shareholders/beneficiaries to have the choice to run the business?
- What is the funding mechanism to buy the business?
- How is the life insurance structured to help fund the purchase price?
- Is the same true for a disability? If so, what is the definition of a disability to trigger the sale. Is the disability funded?
- What are the rules if a partner wants to sell to a 3^rd party?
- Is there a “put” right; to have the company buy the shares of a disputed share holder?
- What are doing concerning incentives to key employees?
- How are you supporting retirement through the company?
- What are you providing in executive compensation to the key people active owners, and officers of the business?

There are many more questions that need to be answered. The elements of your business succession plan will normally be in your business succession agreement and incorporated in the operating or stockholder’s agreement.

CLICK TO Request our Full White Paper and Business Guide Free request (R-1)

Operating Agreement:

An agreement which regulates the company and manages the relationships between the members of the company.

Buy-Sell Agreement

An agreement between the business owners to buy and sell interest in the business at a specified price upon a “triggering event”, such as death, disability, divorce, voluntary withdrawal, non-voluntary withdrawal, bankruptcy, and retirement.

This document is important and serves to obtain a fair price for the stockholder and a path for a smooth transition for the parties involved.

Type of Buy and Sell agreements:

Cross purchase: This is between stockholders to buy departing stockholder’s shares
Redemption agreement: The entity (business) buys the shares
Hybrid/ a combination of above: A “wait and see buy and sell”^[1]

Provisions in the buy and sell agreement

The sale price of the departing owners’ interest and how it will be paid

Installment
Sinking fund
Cash
Life insurance^[2]

Other Methods To Transfer Property:

Although the buy and sell agreement is an effective method to transfer property, other methods, such as ESOPs, compensation plans, and pension plans have a place in funding.

There are other areas and issues in your business planning that need to be addressed at some point and redefined over time.

The valuation of your company should be done by a qualified and certified appraiser. Business owners seem to think they know the value of their business, however, in more cases than not, they are incorrect.

Having A Team Of Financial Experts Will Help You Plan Your Business And Your Estate.

My suggestion is to create a team of advisors who can meet periodically and report on the status of the business to the “team”.

I have found this to be a valuable tool as everyone gets on the same page in the planning process and understands what the owner wishes to accomplish.

Over the years I have created the team consisting of the CPA, attorney, banker, investment, insurance and other professionals who come together and review what the status of the planning is up to that point for the business owner. Normally, the team consists of the professionals who have a relationship with the business owner and are currently doing planning for them. Unfortunately, each professional has their own agenda, and rarely knows what the other professional are doing for the business owner.,

In most cases this is the first time the advisors have communicated with each other. I have always thought this was in the best interest of the business owner and was prudent to use these resources. Putting the business owners’ advisors in the same room once a year could be the best planning strategy, they can employ.

The Bottom-Line Thought

The solutions and strategies are in abundance to solve the issues. The problem is defining what the owner wants in their plan.

CLICK TO Request our Full White Paper and Business Guide Free (CODE R-1)

^[1] A combination of the redemption and the cross purchase. Usually, the stockholder or trust owns the life insurance on the partners. Normally driven by tax issues and positioning.

^[2] Life insurance is normally the least expensive way of funding the death benefit when compared to alternatives. The life insurance can also play a role in providing funds to help stockholders purchase interest in the company.

Ode To Mr. Business Owner!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Key People_Or Group, Passive Ownership, Strategies of growing business, Team, Value drivers, Working On Your Business

Dear Business Owner,

We’ve never met, but I know some things about you. 

I know because I have met and served many business owners like you in my 50 years. 

Here’s what I know about you:

You have a successful business, but it comes with a significant investment of your time, time that you want to start taking back for outside interests. 

You pay the IRS a large amount every year.

You wear all the hats; therefore, you are the value of your business.  You know that it would be worthless without you. 

You desire time to mentor someone, or better yet, a group of people to run your business so you don’t burnout. Your problem is, there is no time to do this because you are so busy. 

You feel trapped within the four walls of your business.

You dread having the quarterly conversations with all of the people that you pay to do the work for you.  Accountants, Bookkeeper, Financial Advisors, Attorneys etc. In fact, these “professionals” probably have never met. 

If you died tomorrow no one would have a clue what to do. 

You have no escape plan.

You think there is no other way. 

Hi, I am Tom Perrone and I want to virtually shake your hand, give you a pat on the back, and tell you “I Get It”. 

You, like many business owners that I have worked with over the last 50 years think that there is no other way than the same old song and dance that has always been done. 

No one listens to you, the one that makes all the plates spin and it upsets you. 

You are up at night pacing the floors wondering how this machine that you created has overtaken your life. 

That wasn’t your goal when you started, in fact, you have no idea how you got here.

You need an escape plan. 

Like I said, “I get it”.

I’ve put together a team to help business owners like you enjoy more time doing what you love outside the business while the machine runs itself. 

I’m passionate about teaching intelligent business owners like you how to get all you can out of your business before it takes all it can from you. 

You run your business…Your business shouldn’t run you.

As a way of saying thanks for taking the time to read this,  

I’ve included a copy of my book:

“Unlocking Your Business’ DNA”- Cracking the code to a better business, bigger profits and more time on the beach!

Click reply and let’s learn more about each other.

Your escape plan awaits…

Talk soon, 

Tom. 

Your Key Group Has Great Value And Creates A Better ROI For Your Company’s Value!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Executive Benefits, Inside Sale, Key People_Or Group, Passive Ownership, Selling Your Business, Team, Value drivers, Working On Your Business

Over the years I have written of the importance of the key group in your company is, and how they enhance your profitability and company value. Not only do they make you profitable while you are running your business, but this group is the key element to selling the business for the highest potential value in the future.

The inside key group creates the actions that help enhance value, such as implementing value drivers and making sure they are being applied correctly. Key management groups make sure the value drivers are implemented, working, and being enhanced constantly.

The Key group learn about the business, in some cases better than the owner. They make business more valuable. They are so talented the competition is aware of their value, and in many cases would like to recruit them.

It would be wise for the owners to recognize the value of the person or group (key person) and put in place strategies to keep them.

Incentive programs: The purpose of this is to keep the key person around. To continue the growth of the person within the business. He may be the person who buys, or totally runs the company.

A vested incentive program: This is to carry out #1, but also to protect the employer from the key person leaving.

Address the potential of your exit strategy in advance. This can be in the form of a discussion about a “stay bonus.” The “stay bonus,” is used when an owner wishes to sell the company but would like the key person to stay on with the new owner. This enhances the value of the purchase price.

Keyman/group: Potential purchasers of the company. It is also important to recognize that the owner may be thinking of becoming a passive owner, wishing to have the key group run the company while the owner peeks their head in occasionally.

There are many ways to address the future knowing the key group is key to your exit strategy. This can range from incentive plans, to things like stock options.

Existing Key Employee

Equity Based Incentive program:

Stock Bonus
Stock option
Stock Purchase
ESOP

Cash based incentives

Cash bonus
Deferred compensation
Phantom stock bonus

Stock Appreciation Right
Supplemental Employee Retirement Plan (SERP)
Executive Coaching Program

Awards based on

Individual key employee performance

Key employee group performance
Company net income growth
Company sales growth
Vesting Formula
Forfeiture Events

Agreements

Non-compete
Non-disclosure
Non-solicitation
Any other agreements that will protect the owner should the key person (group), leave

Three Key Value Drivers  and Why Do They Matter? 

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, evaluations, Key People_Or Group, Selling Your Business, Strategies of growing business, Team, Valuation, Value drivers, Working On Your Business

Value drivers are the elements of a business (systems and procedures), which create business value.   This post will cover Next Level Management (NLM).  In part 2, I will cover  diversified client base  and  operational systems.   

Although there are nine transferrable value drivers, I am going to concentrate of three of them. Although all the value drivers are important, the three I will discuss are considered key drivers.

The three value drivers are key in creating appeal to prospective purchasers of the business. They are important drivers, and at the very least, drivers’ businesses must have in order to grow.  

When a new business owner asks me when they should be thinking about their future exit of their business, my answer always is, “the day they  started their business is the time to start planning for an exit.”    

As you will see, the value drivers in most cases  need time to develop.  As we go through the three of them, you will see that they are strategies that can be implemented at once, but in many cases, need time to develop.   

Next Level Management (NLM):  Successful businesses with value, require business owners to delegate responsibilities to the management team.  NLM is particularly important because without a good management team, it would be hard to implement the other value drivers which are needed to create the maximum business potential value.ⁱ   

Finding and developing a  NLM  team is a challenge for many business owners. However, once the NLM is created, they usually become the team responsible to make the difference between where the business is now, and where the business would like to be.   The NLM is the key to  implementing the value drivers and the operation of them.  

Roadblocks for Business Owners in Developing Their Next Level Management

Many owners believe only they can keep and control the company’s success, since they built the business from infancy.   They  struggle  giving up even small types of control. The thought of not being involved in some of the daily business decisions, scares the daylights out of them, nor do they like the loss of control.   

Lack of installing the value drivers over time.  

 They spend their time working in the business as opposed to working on the business.   I call it their “Business DNA.”    Change is scary and thinking that someone else would be running the business is not consistent with their  fundamental  beliefs.  The possibility of someone else making decisions, which could build or ruin their business is too much for them to imagine.  

Fear of change.    Even if a business owner is not thinking in terms of an exit plan, they do like to think of creating business value. Once they are educated as to how value drivers affect the future value of their company, they become more open to  creating the value drivers, and making the changes.   

Misconception of owners:   Benefits derived to the business owners by installing value drivers is the result of the “full potential value of the business.”   The business grows as the business owner does less work, since the work has been handed off to the NLM.     However, owners have the common concern that installing value drivers will take too much of their time.  With proper planning, implementing the value drivers will create a more stable business, create better performance and scalability.   It is important that the owner understand the concept of developing the NLM team, so that team can create, implement, and manage  the value drivers, as opposed to the owner.    

It is possible for the owner to create the NLM where the owners have some control, and still can play a key role in the company.  Their leading role would be to delegate more responsibilities to the NLM, while focusing on other business responsibilities.   

 Many owners continue to do tasks they despise, just to keep a perceived control.  In many cases, the owner needs to take small steps in giving up control before they can start to feel more comfortable. This is understandable since these are the things, they did to grow their business from day one of the business.   

The owner will see more growth in their company by implementing the value drivers, which will create more options for them when a future transition is a being considered.

In my book, “Unlocking Your  Business  DNA,” I  discuss the problems business owners have working on their business as opposed to time spent working in it.  One of the factors missing is the value of creating value drivers for their business growth.  Once they realize value drivers create increasing company value, they get on board for future changes.

 Through our discussions with business owners, we need to express to them that most future buyers will not want to buy the owner.   They want systems, management, and growth ability.      

Many owners think that they need to be involved with all the problems and issues of their company, thinking they have all the answers and the solutions.   Although this makes the owner feel in control and gives them  self-worth, it does absolutely nothing for the future value of the company, and in some cases may decrease the value.  

Success In Business Is Not Without Challenges!

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, evaluations, Executive Benefits, Income from your business, Inside Sale, Key People_Or Group, Selling Your Business, Strategies of growing business, Team, Valuation, Value drivers, Working On Your Business

DEFINITION OF BUSINESS GROWTH AND TRANSITION

I often refer to my business planning as “Business Growth and Transition,” because I consider the business and the owner, as two separate and distinctive entities.

For example, when the business is growing, the owner of the business needs to grow with the business and envision needed growth. As a business owner, he/she needs to continue to learn, ask more questions, depend on their instincts, experiment, be willing to fail, along with many other experiences to create the changes needed. Without the business owners’ creativity and involvement, the business will stop growing.

Likewise, when planning for the business entity, we also plan for the owner personal needs. The business success creates personal challenges for the business owner, such as succession, estate taxes, family distribution, protection of the assets, and a host of financial and personal planning areas.

STAGES OF A BUSINESS

The business has two distinct stages it goes through which are critical; I define them as survival period and growth period.

Survival period is just what it means! Staying alive! This is where owner learns how to maneuver through the maze of “business savvy” strategies. “What doesn’t kill you, will make you stronger.”

The survival period of business consists of:

Excessive amount of time, sweat, and patience, luck, and much more.
Bottom line: Survive staying in business.
Cash flow, Capital improvements, Inventory, client development create many challenges.

The Growth Mode:

Not to simplify, but this is where the action is. It is up, up, and away! What needs to be done during this stage:

Creates the opportunity for the future value of the business.
To expand in all areas of the business.

Inventing yourself and the company if needed, this includes building value drivers and transferable values.
To become creative, reinventing of products, customers, process.
To reinvent your markets and your clients.
To build a customer base with loyalty, creating culture, and next level management.
Much More…

The expansion in Growth, (NOT ONLY) in markets and products, but also employees and the culture of the business. This is extremely important for the future of the business value, with the focus on growing your business value and to create transferrable value for the future. Owners need to start the process of giving up some of the control to middle management. This also means creating strategies which allow the owners to walk away and allow the business to run effectively and efficiently normally. This is my “Can you Take three months off” question, without an impact on your business profits?

Disadvantages of Growth/ and letting Go

You are giving up control to your management team! You are giving up things you controlled from the very infancy of the business. This is good because a future purchaser wants to buy your business as a running entity. They want a business that can run, and without YOU!

When you start to delegate to others, things can happen. Your key people will learn how to run your business, and start thinking like an employer. They will develop greater relationships with your customers, advisors, and vendors. They will start to create profits for you, ease your time in the business, and allow you to enjoy more free time, however, there could be a price to pay!

Tough Questions to Ask

What if your key people got to know your business so well, and they wanted to buy it from you, what would you do?

What if you did not want to sell it to them at the time they want to buy? Will they walk? Will they stay? Will the relationship change?

Will they go to a competitor?

Will they take your customers and employees with them?

If this happened, what are you doing to protect yourself?

Consider this: I recently had a client who went through this nightmare. The key people (2 key employees), left and started their own business. They also took other employees and customers with them.

Unfortunately, the protection which we outlined to the owner three years prior was never implemented, and they are paying the price for it now.

We told them to make sure they had programs in place to protect themselves from the business growth and success.

Things Such As:

Key person documents: such as non-compete, non-disclosure and non-solicitation of customer and employee agreements.

Benefits with Vesting: We also suggested that they put in a vested benefit package for them and stagger the time where they would only have a partial vesting immediately (we have found this to be a valuable motive to stay).

Lesson to be learned. If it happened to them, it could happen to you. Your key people will take over your business, which is good because as it creates transferrable value for the future. However, you must protect yourself from your business success.

A Great Benefit Every Business Owner Should Be Aware Of!

January 24, 2020January 24, 2020 by YOUR BUSINESS WORTH, posted in Buy and Sell Agreements, Executive Benefits, Income from your business, Key People_Or Group, Tax Free Income, Team, Uncategorized, Working On Your Business

Over the years in the small business arena, when retirement is mentioned, the discussion usually focuses on programs like 401k, Profit sharing, SEP’S, and Simple Plans.

They are all very good plans and every business should offer one of them to their employees for the purpose of having a benefit plan where employees can save for their retirements.

However, not every employer wants to take on the burden of funding retirement for their employees for many reasons. The reasons range from a lack of cash flow, employee groups who would rather take the money home.

In situations where the employer feels they would like to use their company to create a benefit for themselves, and not the employees, they should look into an executive compensation plan called the CEEP (Corporate Executive Equity Plan). The CEEP is a hybrid of a few types of benefit plans used for the higher paid group in companies and for the owners.

The term “non-qualified “, refers to a plan that normally is not used for the masses, but used for a selected group of people. As an example: Employer A can decide that they want to put a plan in for employee B, C but not employees D-Z. In most cases the plan itself would not be tax-deductible as a “plan”, however, it can be tax deductible under certain conditions.

How the CEEP works!

Mr. Jones owner of the Big Dip Donut shop decides that he wants to allocate $25,000 a year into a retirement plan for himself and no other employees of the company. For the most part, he can’t have a qualified retirement plan without offering it to the employees. Even a “Simple Plan”, which is the easiest to implement would have drawbacks. Continue reading “A Great Benefit Every Business Owner Should Be Aware Of! “ →

A Road Map For A Succession Planning Essentials For Planning Creating Your Team Of Advisors

January 24, 2020January 24, 2020 by YOUR BUSINESS WORTH, posted in Buy and Sell Agreements, Company Wealth, Income from your business, Tax Efficient, Team, Uncategorized, Valuation, Value drivers, Working On Your Business

Who Are They	Their Role
Accountant	Develops financial statements Provides tax advice Assists in Estate planning Assists in Business value
Attorney	Negotiates agreements Tax Advice Prepares estate documents Advises on business structure along with implementation
Management Team	Manages the ongoing operation Operational advice and expertise for new owner Enables business continuity
Business Appraiser	Estimates fair market value of Business Provides the credibility of asking price Advice on how to maximize business value
Business Broker	Finds buyer and market insight for value
Financial Advisor	Facilitates and council’s family goals and value Plans for the future of the estate and distribution May have the capacity to help fund Buy and Sell Agreements and Deferred Compensation situations Offers financial advice to all the members Helps project future financial needs
Banker-Commercial	Financing options for acquisition Access to other experts that may be needed Supports the business transition before and after the acquisition

Exit Options: 1

Transfer the business to a family member; This represents about 42%

Sell to partners or your employees (directly or through ESOP); This represents about 17%

Sell to a third party; 19%

Partner: 10%

Wind down business -3%
Don’t know -8%

Questions To Consider

Are there one or more family members who want to take over the business?
Does the family successor have the skills to operate the business and guarantee the return on your investment?
What are the qualifications and skills someone would need to purchase your business to guarantee the successful transition?
If you transitioned to your family member, how will your employees, suppliers and customers react?
What is the most tax-efficient way to pass ownership to family members?
Will you continue to have a role in the business?
How will this succession option impact the rest of the family?

Selling to partners or your employees

Which employees or partners are best suited to purchase your business?

Do they have funds or access to funds?

Will you have to finance part of the sale?

Do they have the management capability to run the business successfully?

Can the business take on debt for this transaction long term?

Where will the purchase price come from?

Do the purchasers have assets as collateral?

Third party

Who are likely candidates in your industry that would be interested in your business?

Do you want to sell the whole business or only part of it?

Will the potential buyer have the entire financial resources to purchase the business, or would you be prepared to partially fund their acquisition?

What is the most tax-effective way to sell your business?

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Category: Team