Tag: business strategy

Why 75% of Businesses Fail in 10 Years (And How to Fix It)

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Costs, Uncategorized

By Thomas J. Perrone, CLU, CIC

Your Business May Have a Plan. But Does It Have a Plan for the Details?

After more than 53 years working with business owners, I have noticed a recurring problem:

Business owners are often unaware of the things they don’t know.

And that lack of awareness can be expensive.

Most business owners are very good at running their businesses. They know their customers, their products, their employees, and their markets. They know how to generate revenue and solve the problems that show up every day.

But there is another side of business ownership that often gets overlooked—the planning that takes place behind the scenes.

I call this the Plan for Details.

It is the planning that addresses how you will grow the business, protect what you have built, create wealth from the business, and eventually transition out of the business.

It is different from the action plan that gets you into business and keeps the cash flow moving.

And that difference can have a tremendous impact on the ultimate value of your business.

Three Levels of Awareness

I believe there are three different levels of awareness among business owners.

1. You know there is a problem—but you tolerate it.

You recognize that something isn’t working perfectly, but because the business is still operating, you don’t address it.

“It’s working well enough” becomes the answer.

2. You discover a problem and fix it.

You weren’t aware of the issue, but once someone points it out, you understand it and take action.

This type of awareness can prevent financial leakage and help improve the business.

3. You don’t know what you don’t know.

This is the most dangerous situation.

You don’t know that an opportunity exists. You don’t know that a risk exists. You don’t know that something is costing you money.

And because you don’t know about it, nothing changes.

This is one of the biggest challenges facing business owners today.

There are opportunities to increase business value, protect the company, improve cash flow, retain key employees, create wealth outside the business, and prepare for a future transition—but many owners simply aren’t aware that these opportunities exist.

The Business Owner’s Action Plan vs. the Plan for Details

When most people start a business, their attention naturally goes toward the Action Plan.

They want to get their product or service to market.

They want customers.

They want revenue.

They want cash flow.

They want the business to grow.

And that’s exactly where an entrepreneur should be focused in the beginning.

The Action Plan is exciting. It’s where the energy is.

But the part that often gets avoided is the Plan for Details.

The Plan for Details addresses four critical areas:

  • Growth

  • Protection

  • Equity creation and distribution

  • Exit and transition

These are the areas that can determine whether a business simply produces an income—or ultimately creates substantial wealth for its owner.

What Happens Without a Plan for Details?

Without this type of planning, business owners can find themselves facing problems they never anticipated.

They may:

  • Lose key employees.

  • Lose customers or valuable relationships.

  • Face lawsuits or other unexpected risks.

  • Have no plan if the owner dies or becomes disabled.

  • Experience significant financial consequences when an owner dies.

  • Lose money unnecessarily through inefficient tax planning.

  • Fail to build wealth outside the business.

  • Struggle to create a strong company culture.

  • Have difficulty attracting and retaining talented employees.

  • Miss opportunities for innovation.

  • Discover too late that their business isn’t attractive to a buyer.

None of these problems necessarily mean the owner did a poor job running the business.

They may simply mean that the owner never had a comprehensive Plan for Details.

Building Business Value Is More Than Increasing Revenue

One of the most important concepts in business planning is understanding value drivers.

Value drivers are the characteristics of a business that make it attractive to a prospective buyer.

A buyer doesn’t simply look at what the business makes today.

The buyer wants to know:

Will this business continue to produce cash flow after I buy it?

That leads to questions about:

  • Growth potential

  • Cash flow

  • Key employees

  • Management depth

  • Systems and processes

  • Customer relationships

  • Company culture

  • Dependence on the owner

  • Opportunities for future growth

A business with strong systems, capable employees, good cash flow, and growth potential is generally much more attractive to a buyer than a business that depends almost entirely on its owner.

That’s why planning for a transition shouldn’t begin when you’re ready to sell.

It should begin years—even decades—before you leave.

What If You Died Tonight?

Here’s a question every business owner should ask:

What would happen to your business if you died tonight?

Or what happens if you become disabled?

What happens to your employees?

What happens to your customers?

What happens to your bank financing?

What happens to your family?

What happens to the value you’ve spent years building?

For example, the loss of an owner or key person can have an immediate impact on a company’s financial stability and operations.

And a key employee who leaves may take valuable relationships, knowledge, employees, and even trade secrets with them.

The solution isn’t simply to hope they stay.

The business needs a strategy for retaining the people who are critical to its success.

Key Employees Are Part of Your Business Value

A strong company doesn’t depend entirely on the owner.

The goal should be to develop people who can think and act like owners.

When you accomplish that, several things happen.

You create stronger management.

You create greater freedom for the owner.

You create more time for family and other priorities.

You improve cash flow.

You create a business that can operate without the owner being involved in every decision.

And you make the business more attractive to a future buyer.

A buyer wants to purchase a business—not purchase a job.

If the owner walks out the door and the business falls apart, the business becomes much harder to sell.

Culture Is a Business Asset

Another often-overlooked component of business value is company culture.

A strong culture can make recruiting easier because people want to work for companies where they feel valued and where they can see a future.

Culture can also improve retention.

And when good people stay, they accumulate knowledge, build relationships, develop systems, and become increasingly valuable to the organization.

The result is a stronger business.

Creating Wealth Outside the Business

Many business owners spend decades building wealth inside their company.

The problem is that their business may represent the overwhelming majority of their net worth.

That creates concentration risk.

It also creates a problem when the owner eventually wants to retire.

The question becomes:

How do you convert business success into personal wealth?

This is where careful planning can be particularly important.

The business may be capable of generating cash flow that can be used strategically to create wealth outside the company while continuing to grow and operate the business.

The objective isn’t simply to accumulate money.

The objective is to create a business that produces cash flow, builds equity, and ultimately allows the owner to convert business value into financial independence.

Why Traditional Planning Often Doesn’t Work for Business Owners

One reason business owners don’t have a Plan for Details is that traditional planning can become unnecessarily complicated.

Business owners are busy.

They don’t want a planning process that takes months and requires endless meetings.

They want to understand the issues, make decisions, and move forward.

Another problem is that different advisors often work independently.

The business owner may have a CPA, attorney, financial advisor, insurance professional, and business consultant—but nobody is bringing the pieces together.

In my experience, the best planning occurs when the appropriate advisors work together.

Your CPA understands the tax issues.

Your attorney understands the legal issues.

Your financial advisor understands investments and financial strategies.

Your business consultant understands the business.

Put the right people around the same table and you can begin solving the actual problems of the business rather than simply selling products.

The Four Areas of the GWT Business Planning System

The GWT Business Planning System focuses on four fundamental areas.

1. Growth

How can you increase the value of the business?

What systems, people, processes, and strategies can help the company grow?

2. Protection

What happens if something goes wrong?

What if the owner dies?

What if the owner becomes disabled?

What if a key employee leaves?

What if the company is sued?

What if cash flow suddenly becomes a problem?

Protection planning is about preparing for the “what ifs.”

3. Equity Creation and Distribution

How can the business create wealth for its owner?

And just as importantly, how can some of that wealth eventually be distributed outside the business?

The goal is to use the business strategically—not simply as a source of income, but as a vehicle for creating wealth.

4. Exit and Transition

Eventually, every business owner has to answer one question:

What happens to the business when you’re no longer running it?

That doesn’t necessarily mean selling tomorrow.

Transition could be 10, 20, or even 30 years away.

But the decisions you make today can have a tremendous impact on the options available to you later.

The GWT 30-Day Business Planning Pathway

The GWT Business Planning System was designed around a simple idea:

Business planning doesn’t have to consume your life.

The process uses a series of approximately 15–16 planning blueprints that help identify the areas that deserve attention.

You don’t necessarily need all of them.

You identify the areas that are most relevant to your business, prioritize them, and then work on them one at a time.

The process is designed to take approximately 2–4 hours of the business owner’s time over a 30-day period.

It includes short educational videos, forms, discussions, and planning sessions.

The goal isn’t to overwhelm you with information.

The goal is to help you become aware of what you don’t know, identify the areas that need attention, and establish a practical path forward.

The Real Goal Isn’t a Bigger Binder

Business planning shouldn’t be about creating a complicated document that sits on a shelf.

It should create action.

A good Plan for Details should help you:

  • Build business value.

  • Protect the value you’ve created.

  • Improve cash flow.

  • Develop key employees.

  • Build management depth.

  • Create a stronger company culture.

  • Reduce dependence on the owner.

  • Create wealth outside the business.

  • Prepare for unexpected events.

  • Increase the likelihood of a successful transition.

Ultimately, it should give the owner something that is often just as valuable as money:

freedom.

Freedom to spend more time with family.

Freedom to take time away from the business.

Freedom to make decisions based on opportunity rather than necessity.

And eventually, freedom to leave the business on your terms.

Your Business Needs More Than an Action Plan

The Action Plan gets the business moving.

The Plan for Details determines what happens after it starts moving.

If you are a business owner, ask yourself:

Do I know exactly what would happen to my business if I died, became disabled, or lost a key employee?

Do I have a plan for building value?

Do I know how I will eventually get my wealth out of the business?

Could my business operate successfully without me?

Would someone want to buy my business today?

If you don’t know the answers, that’s not necessarily a problem.

It may simply mean you’ve discovered something you weren’t aware of.

And that’s where good planning begins.

The Bottom Line

Most business owners don’t have a business planning problem because they don’t care.

They have one because they’re busy running the business.

The Plan for Details is designed to help close that gap.

It gives you a way to step back from the day-to-day operation of the company and look at the bigger picture—growth, protection, equity creation, and transition.

The earlier you begin, the more options you have.

And the objective isn’t simply to build a bigger business.

It’s to build a business that creates wealth, protects that wealth, and ultimately gives you the freedom to decide what happens next.

Lets Discuss: Toms Calendar

Free Download; The Planning GWT PLANNING SYSTEM® Guide

Article: Where you are- Where you Could Be

Tperrone@necgginc.com

If you would like to learn more about the GWT Business Planning System and the 30-Day Business Planning Pathway, contact Thomas J. Perrone, CLU, CIC at 203-530-6615.

Are You Building Your Business by Design… Or by Luck?

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, evaluations, Uncategorized

Are You Building Your Business by Design… or by Luck?

A Four-Pillar Framework for Turning Business Success into Lasting Personal Wealth

By Thomas J. Perrone, CLU, CIC | tperrone@necgginc.com

Executive Summary

Most small business owners don’t lack ambition — they work hard, grow steadily, and reinvest everything back into the company. Yet many reach a point where an uncomfortable question surfaces: is the business growing by design, or simply by default? While revenue climbs, critical areas such as financial planning, risk protection, tax efficiency, and long-term transition are frequently overlooked, not from a lack of care but from a lack of time, clarity, or structure.

This white paper summarizes a structured planning approach — often referred to as a “Destiny Plan” — that aligns a business with its owner’s ideal life and financial future. Rather than adding complexity, the framework organizes the essential drivers of long-term success and security into four pillars: Growth, Protection, Equity, and Transition.

The Hidden Gaps in Growing Businesses

Business owners are often aware, sometimes painfully so, that critical elements of their business are being neglected. Common gaps include:

  • No clear long-term growth strategy
  • Limited protection against unexpected events
  • Inefficient tax planning
  • No defined exit or succession plan
  • Uncertainty about how to convert business success into personal financial security

Left unaddressed, these gaps mean that even an outwardly successful business can remain financially fragile.

The Questions Every Business Owner Should Ask

A useful starting point is self-assessment. Consider the following:

  • Do you have a clear, fail-safe plan to grow, protect, and eventually transition your business?
  • If you had to step away tomorrow — due to retirement, disability, or worse — what would happen?
  • Could you extract your business value in the most tax-efficient way possible?
  • Are you maximizing your compensation and benefits through your business?
  • Do you have a plan for the unexpected — economic downturns, key employee loss, or sudden life events?

Difficulty answering any of these is a signal, not a source of alarm: it indicates that planning is overdue, and that the owner is far from alone in facing this gap.

The Four-Pillar Framework

What most business owners need isn’t more complexity — it’s clarity. A structured approach brings together the key elements that drive long-term success and security into one cohesive strategy, built on four essential pillars.

1. Growth: Building with Purpose

Growth should be intentional, not accidental.

  • Implementing systems that scale with the business
  • Developing strong leadership and teams
  • Focusing on the true drivers of business value

2. Protection: Preparing for the “What Ifs”

Every business faces risk. The question is whether you’re prepared.

  • What if a key employee leaves?
  • What if cash flow tightens?
  • What if you can’t continue running the business?

Proper protection planning ensures the business can withstand the unexpected.

3. Equity: Turning Success into Wealth

Your business is likely your largest asset — are you leveraging it effectively?

  • Accessing equity without unnecessary tax burdens
  • Structuring compensation to maximize benefits
  • Building wealth both inside and outside the business

The goal is not just to grow a business — it’s to create real, usable wealth.

4. Transition: Planning Your Exit Before You Need It

Every business owner will eventually leave their business. The only question is how.

  • Will it be on your terms?
  • Will you receive full value?
  • Is your family or team prepared?

A well-designed transition plan enables an exit that is smooth, efficient, and profitable — whether through sale, succession, or retirement.

A Simple First Step

Owners don’t need to solve everything today — but they do need to start. Even a quick self-assessment can reveal where the biggest opportunities lie. Small adjustments in the right areas can lead to significant improvements in both business performance and personal financial outcomes.

Conclusion

A business should serve its owner’s life, not the other way around. With the right planning, an owner can move from uncertainty to clarity, from reactive decisions to intentional strategy, and from simply building a business to building a lasting legacy. The core question remains: are you ready to start designing your future — on purpose?

TAKE THE FREE BUSINESS OWNER 3 MINUTE SURVEY: With this survey we will send you a report of where you are in your planning today vs. the areas you should revisit to maximize your planning we call this the “Where You Are, and Where You Could Be!” DOWNLOAD

Download your free “Growing Your Business Guide With GWT PLANNING SYSTEM® Download

Also, if you would like to discuss your current situation, I would be happy to help you with a discussion, feel free to contact me: MY Calendar

Youtube:  The Business Owners Who Plan vs. Everyone Else: Luck or Design

Thomas J. Perrone, CLU, CIC | tperrone@necgginc.com

Four Pillars of a Strong Business: Growth, Protection, Transition, Equity

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Executive Benefits, Income from your business, Key People_Or Group, Selling Your Business, Strategies of growing business, Working On Your Business

Are You Building Your Business by Design… or by Luck?

By Thomas J. Perrone, CLU, CIC

Most small business owners don’t start their journey with a lack of ambition. They work hard, grow steadily, and pour everything into their company. But at some point, an uncomfortable question surfaces:

Is my business growth intentional… or is it just happening?

If you’re like many owners, you’re fully absorbed in the daily demands of running your business. And while revenue may be increasing, key areas—financial planning, protection strategies, and long-term transition—often go overlooked.

That’s where risk quietly builds.

The Hidden Gaps in Growing Businesses

Many business owners are aware—sometimes painfully aware—that critical elements are being neglected. Not because they don’t care, but because they simply don’t have the time, clarity, or structure to address them.

These gaps often include:

  • No clear long-term growth strategy
  • Limited protection against unexpected events
  • Inefficient tax planning
  • No defined exit or succession plan
  • Uncertainty about how to turn business success into personal financial security

Without addressing these, even a successful business can become fragile.

The Questions Every Business Owner Should Ask

Take a moment to consider:

  • Do you have a clear, fail-safe plan to grow, protect, and eventually transition your business?
  • If you had to step away tomorrow—due to retirement, disability, or worse—what would happen?
  • Could you extract your business value in the most tax-efficient way possible?
  • Are you maximizing your compensation and benefits through your business?
  • Do you have a plan for the unexpected—economic downturns, key employee loss, or sudden life events?

If any of these questions are difficult to answer, you’re not alone—but it’s a sign that planning is overdue.

From Uncertainty to a “Destiny Plan”

What many business owners need isn’t more complexity—it’s clarity.

A structured approach—often referred to as a “Destiny Plan”—focuses on aligning your business with your ideal life and financial future. It brings together the key elements that drive long-term success and security into one cohesive strategy.

At its core, this approach focuses on four essential pillars:

1. Growth: Building with Purpose

Growth should be intentional, not accidental. That means:

  • Implementing systems that scale
  • Developing strong leadership and teams
  • Focusing on the true drivers of business value

 

2. Protection: Preparing for the “What Ifs”

Every business faces risk. The question is whether you’re prepared.

  • What if a key employee leaves?
  • What if cash flow tightens?
  • What if you can’t continue running the business?

Proper protection planning ensures your business can withstand the unexpected.

 

3. Equity: Turning Success into Wealth

Your business is likely your largest asset—but are you leveraging it effectively?

  • Accessing equity without unnecessary tax burdens
  • Structuring compensation to maximize benefits
  • Building wealth both inside and outside the business

The goal is not just to grow a business—but to create real, usable wealth.

 

4. Transition: Planning Your Exit Before You Need It

Every business owner will eventually leave their business. The only question is how.

  • Will it be on your terms?
  • Will you receive full value?
  • Is your family or team prepared?

A well-designed transition plan ensures you can exit smoothly, efficiently, and profitably—whether that’s through sale, succession, or retirement.

 

A Simple First Step

You don’t need to solve everything today—but you do need to start.

Even a quick self-assessment can reveal where your biggest opportunities lie. Small adjustments in the right areas can lead to significant improvements in both business performance and personal financial outcomes.

Final Thought

Your business should serve your life—not the other way around.

With the right planning, you can move from uncertainty to clarity… from reactive decisions to intentional strategy… and from building a business to building a legacy.

The question is:

Are you ready to start designing your future—on purpose?

Free download report:

Where you are, and where you could be!

https://www.allclients.com/Form3.aspx?Key=E29266E845E39AFF52FA8CF13E04A8F9

tperrone@necgginc.com

 

Case Study: Rapid Sales Growth and Ownership

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, Funding your Buy and Sell, Key People_Or Group, Strategies of growing business, Valuation, Working On Your Business

Case Example Using Term Insurance

By Thomas J. Perrone, CLU, CIC

This was a situation where the company needed protection but wasn’t ready to purchase permanent insurance, even though the situation called for it.  However, the term insurance gave them what they wanted at the time and gave them the needed protection. 

Scenario: 

 A thriving business, comprising three partners—a relationship builder, an idea generator, and a product engineer—experienced remarkable sales growth within a few years. However, a potential challenge arose regarding ownership transfer upon a partner’s death, as all partners shared familial ties. 


To mitigate this concern, a comprehensive stock redemption program was devised and funded through a term insurance policy with a premium exceeding $60,000. This strategic approach enabled the business to navigate ownership transfer complexities and ensure the continuity of its operations.

Through the years, parts of the term insurance has been converted, and the company is paying about $125,000 in insurance premium to fund their liabilities and commitment.  

The case was developed through a relationship i had with one of the owners, through an introduction.  

Lesson:  

Even though this was a start up and a young company, if I has assumed it did not have the cash flow, I would have lost out on all the great potential.  Don’t assume anything, but let your client tell you what they want and why. 

THE WHY: 

There was a past history of the one of the current partners where their family member was part of a company where the partner died.  No planning was done, so the deceased partners family became the new partners.  This was not pretty, and the business ended up in chaos.  Obviously, a motivating factor for the current owner to have a good Buy and Sell Agreement where it was funded 

If you are an advisor who is working with business owners or wants to develop a business market segment in your practice, we should talk. We offer great opportunities working with our organization and deep backup.  

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

THREE WAYS TO GROW YOUR BUSINESS WEALTH! 

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Executive Benefits, Funding your Buy and Sell, Income from your business, Inside Sale, Key People_Or Group, Passive Ownership, retirement, Selling Your Business, Strategies of growing business, Tax Efficient, Tax Free Income, Uncategorized

Thomas J. Perrone, CLU, CIC – NEW ENGLAND CONSULTING GROUP OF GUILFORD, INC

Growing value in your business can create tremendous wealth, however, only 15-30% of the small businesses will sell, which creates the “if factor”, the unknown.  

The percentage of sales is lower for the smaller owned business, more like 15%.  

Building your business to its highest potential value is possible by having guidelines of what must be done as you grow the business.  

To hedge the “what if’s” of selling it, you can use the cash flow of the business to create other assets such as executive compensation and qualified benefits and plans.   

Many owners neglect to consider these options and end up with too much wealth in their business, causing liquidity and tax problems when they leave, die or become disabled. This presents the problem of “how do you get your wealth out of your business on a tax advantaged method” when you want to leave the business and you need it?  

Building Your Business to Sell in The Future! 

Here is a list of strategies that will help in growing a robust business and greatest potential value.  

  • Develop value drivers  
  • Create a culture- employees come to you because of it 
  • Develop a middle management 
  • Systematize your business 
  • Customer diversification  
  • Avoid being dependent on a few customers for your sales  
  • Marketing plan- and always update it and analyze it 
  • Focus on growth of revenue, lowing of costs 
  • Protect yourself from litig 
  • Make sure you protect yourself such as  
  • Fund your Buy & sell agreements, bank loans, audit your liability insurance, protective documents, etc. 
  • Have a strategy to sell or transition your business, such as growing the middle management, and key people to step in and run the company, or even buy it. This is a long-term process, but you must put things in order and work on strategies to get the greatest potential value from the business.  

When Considering Using Your Business Cash Flow to Develop Executive Compensation and Other Benefits,  

Such as:  

  • Executive Compensation plans, where the company contributes to the plan, and you as owner pay as little as 2% in taxes on the contribution.  
  • Salary Continuation and deferred compensation arrangements for you.  
  • Deposit into your company’s retirement plan (like 401k, profit sharing, 403b, etc.). However, if you are a “high earning business owner”, do not load up on 401k contributions and other contributory plans as the tax consequences are severe.  
  • Make sure your buy and sell agreements are funded and updated. Make sure they cover at least the seven major triggers (death, disability, voluntary and non-voluntary termination, divorce, bankruptcy, retirement).  
  • Have critical illness plans set up such as medical reimbursement plans, disability, and health coverage.  
  • Tie your major Key group to your company as they are the value of the company and contribute to the cash flow of your company, allowing you to implement these strategies.  
  • Create vested benefit schedules to keep them with you  
  • Have a company evaluation /appraisal periodically.  
  • Focus your attention on growing sales, as all things point to sales revenue. 

Executive Compensation Is a Fantastic Way to Extract the Value of Your Company on a Tax-favored Basis, And Not Tie It Up in Your Company, Having It Available to You When Needed. 

There are but a few thoughts concerning building wealth through your business while building your business.  

If you would like to receive my report on the “JFK ERA BENEFITS THAT CREATED SUBSTANTIAL WEALTH FOR BUSINESS OWNER”, CLICK THE link and it will download. This benefit was around in the 50’s, but only for the bigger companies, now it is available to the smallest of businesses, and may be one of the greatest business owner benefits available.  CLICK JFK 

The Benefits Of Keeping Your Key Person And Key Group!

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, Life Insurance Types, Strategies of growing business, Tax Free Income

 

Recently, I wrote an article about the “Quintessential Employee” and covered all the benefits of having a key person in your company. 

The Education of the Quintessential Employee! 

Some of the attributes of the key person are:  

  • Creates more business value by freeing owners to focus on other profitable tasks 
  • Purchasers of a business want to have middle management in place 
  • Builds reputation and culture 
  • Key people tend to impress other employees as a good example 
  • Key people, as described, are also likely future purchasers of the business, or 
  • Likely to run the business while the owner enjoys life, but still has the control and wealth 

For the full article, download The Benefits Of Keeping Your Key Person And Key Group

Enjoy the download of the full article. The link in the article will download immediately the option of receiving the report.

Download The Article

The Education of the Quintessential Employee!

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Executive Benefits, Selling Your Business

My friend of fifty-four years, George, is a very remarkable person. In a recent conversation I had with him, I realized that George defines the “quintessential employee.”  Why? He makes the “quintessential employee” easy to spot. Just follow him around when he works.

As George was telling me about his history with his company, he related how the company owner came to visit him unexpectedly to thank him for his service of 29 years. When I asked him why he thought the owner appreciated him, he described for me all the things he did over that period. 

Consequently, what George told me was the definition of the “model key person.” A person that every business owner wants, and needs, in their organization. 

You can spot a model employee in a heartbeat because:

They are the first ones to come to work. They almost never take time off. They volunteer time when needed to cover for others. They learn more than they must and are eager to learn. They are so good at their job (s) you would think that they were the owner. 

Key employees like George are valuable for the owners because, they always make life easier for the owners. Key people bring so much to the table, and are the most valuable asset in a company. 

Intrinsic rewards examples in the workplace

Below are some intrinsic rewards that may affect your workforce. Fostering these activities and feelings in the work environment could help your team grow and thrive. A key person exemplifies these values. 

  • Completing meaningful tasks
    • Letting employees be selective
    • Gaining a sense of competence
    • Making noticeable progress
    • Feeling inspired to be more responsible
    • Being an important part of an organization or team
    • Feeling accomplished
    • Feeling pride

I have frequently suggested to many business owners that they groom talented people in their firms who have the take charge values and attitudes which parallel the owner’s. They normally get it, want it, and can do it. 

A key thing an owner can do is to surround themselves with like-minded and value driven employees and build from there. The key person has the values of the owner, and the key person influences other workers over time. They set the example of the company’s culture and the value of the owner and the company. 

Two Questions:  

  1. How do you find such a person? 
    1. How do you keep them? 

Finding is the hard part, keeping is the easy part.

Finding the right person really comes down to the culture which the company portrays to the public. Like Costco or Trader Joe’s, who have the reputation of a wonderful place to work. They continually enhance their reputation of wonderful places to work. By having a well-known culture, companies attract like-minded individuals. Also, having the sense of value, the company can immediately filter applicants who apply for a position. Knowing the company values, is a built-in filter and a screening tool for the company when hiring. Question: “Can this person develop into a key person”? And “Does this person have the values that represent this company?”

Small family businesses can build that type of culture by hiring based on value, creating good compensation, benefits, giving respect to workers, positioning them in the right seat, (also taking them out of the seat if it does not fit, and putting them in another seat the is more appropriate), respect for the workers, along with other factors. 

Retaining employees can be accomplished through benefits, time off, respect, vested benefits, ownership interests, and several other ways. 

The importance of developing and keeping key people cannot be overlooked. 

  • Creates more business value
    • Purchasers of a business want to have middle management in place
    • Builds reputation and culture
    • Key people tend to impress other employees as a good example 
    • Key people, as described, are also likely purchasers of the business, or
    • Likely to run the business while the owner enjoys life, but still has the control and wealth

My suggestion to many small business owners over the years has been to find ways to build a key group as quickly as they can and to build the group around the values which the owners have. 

If you have an interest in learning other ways of keeping your key people, this video will be of value. 

Case Study #3. Corporate Executive Equity Plan (CEEP)

For A Free White Paper called, “Wealth Without Taxes”. Click

If you didn’t think you had to plan- Get ready to in 2022!

by YOUR BUSINESS WORTH, posted in Uncategorized

Over the years I have observed the inability of many business owners to plan their business and personal estate effectively, for one reason or another. Any excuse doesn’t matter, the bottom line is many (great majority of business owners) don’t have adequate estate and business financial plans. I have often referred to them as “plan by default”, as opposed to a “designed plan”. Guy Baker is were I first heard the terms this way. Very adequate considering the subject.

As you can see in the illustration below, when you consider the exposure of $5 million estate after exemption credits are use, you have the additional loss of the stepped up cost basis. There is a tax ratio of 74% vs. 12% in 2022 if some of the proposals go forth.

Image the business owner who has a high value property which has deferred gain locked in, and the results of that property when at death it is passed to the children?

Here is one of the reasons why business owners should pay attention.

zoom in.

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 3rd 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.

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[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. 

You Saw It Coming And I Saw It Coming, We Both Saw It Coming…But we still bought it!…

by YOUR BUSINESS WORTH, posted in Uncategorized

After fifty years of running a tremendously successful planning firm, WORKING ONLY eighty days a year, I can make this statement with full confidence!  

Every business owner deserves success and financial independence when they give all they must to build a business.  NO issue here.  If done correctly they will enjoy financial independence and an abundance of leisure time which I call “your beach”.   

What gets in the way of preventing a business owner from becoming financially independent and finding their “own beach”, are two things:   

First Reason: The business owner has their hands in everything. Nothing gets by them.    They work eighty hours a week and wonder why they have no time for themself or families.   They believe you must work “hard” (to them that means anything that keeps them busy).   While they are doing insubstantial work, they are neglecting the important work (The Business and Financial Key Elements to Their Business).   

Second Reason:  Archaic and falsehood beliefs that business owners “bought into”, such as.  

  • Your inventory and your receivables are like money in the bank,  
  • You must work hard in the early years so you can slow down in the later years 
  • Take every dime you have and invest it in your business 
  •  You need to invest in your business in order to grow 
  •  Every business needs time to grow 
  •  You can’t grow fast 
  •  Borrow as much as you can 
  •  It’s a lot of money, but it’s a write off 
  •  When you go into business you initially spend more money than you want to 
  •  You need to invest in your business   
  • Plow all your profits back into the business   
  • You don’t need to give your key people additional benefits 
  • “It’s easier for me to do it, I’ll do it the right way” attitude 
  • If I train someone to do it, they may leave me and start their own business 
  • You don’t need a business valuation just use a simple formula 
  • I have all the systems in my head, we don’t need a document 
  • I’m not worried about leaving the business, they will figure it out 

Falsehoods, and archaic business principals   do more to destroy businesses than a bad economy.   If you don’t fix this situation, no matter how hard you work; YOU WILL NEVER GET TO YOUR FINANCIAL INDEPENDENCE AND “YOUR BEACH”.   It’s that simple!  

But the good news is that you can correct these problems by using a technique that has worked for me and my business clients for over fifty years.    It’s called the “ONE PAGE BLUEPRINT SOLUTION”, and it only takes TWO HOURS A MONTH (two lunch breaks) to implement and correct the two major reasons why business owners can’t become financially independent and find their “own beach.”    

To help you learn more on how you can eradicate the two reasons, I am offering a free copy of my eBook called, “Unlocking Your Business DNA”, (Cracking the code to a better business, bigger profits and more time on the beach).   THIS BOOK WILL help you understand the principals discussed.  Limited supply.  To receive your FREE EBOOK, CLICK.

* Book can be purchased on Amazon; Kindle and Paperback. All profits go to Wounded Warrier Project.

**Full Steam Ahead (title; You Saw It Coming)