An Overlooked Source of Capital
Business Planning Opportunities
Most Business owners put their maximum efforts into creating and running their businesses. But additional planning must be done to insure that the business can survive the death, disability or retirement of an owner or key employee.
The unique issues related to succession planning, risk mitigation and family income planning present unique challenges and considerations that are related to the running of a business:
Some of those challenges and considerations include:
- Is there access to liquidity to take advantage of growth opportunities, or to supplement business income in tough economic times?
- Retention of key employees is integral to the success and growth of the business.
- Continued income for family members in the event of premature death or disability of the business owner and/or their partners.
- The transfer of business interests to a family member or trusted employee/partner to ensure that the business is a going concern and continues to provide income during retirement of the primary partner.
- A formalization of the business owner?s wishes and intent to surviving partners and family members
- The strategies and techniques available to small business owners for retirement planning.
Results of Failing to Plan
Running a business is challenging enough ? and the time and monetary resources required to create succession plans seems like time off task. But the reality of failing to plan creates this:
- Lack of liquidity to facilitate the purchase of business interests by surviving or remaining partners, leaving family members with an unmarketable interest in the business.
- Confusion and disagreements as to deceased partner?s intent for successors and other family members involved in the business and their ongoing roles.
- Loss of control of the business upon premature death of the owner.
- Inability to retire comfortably when desired.
- Loss of tax-advantageous transfer techniques that require advanced planning and structure?prior to the death of the owner.
Creating a Legacy
What do you want to happen regarding the future of your business?
- While you?re still an active part of the business
- When you decide to retire
- If something happens to you (your death or disability)
Q. What would be the impact on your family of this business failing on your death or disability?
Q. What is your business worth? How do you arrive at that amount?
Q. What would happen to your business if Key Person or Key Persons were suddenly gone? Are you insured against that loss
Q. How would the current debt of the business be paid if you are not around?
Q. Is your current retirement plan up to date and is it performing the way you intended?
Q. Do you need additional tax deductions related to your business?
Q. Are you rewarding and motivating your employees so that the business is able to retain them long-term?
Q. How many family members are currently involved in the business? Will this change in the future?
Q. Loss Protection: what techniques are in place now, above and beyond the replacement of the physical property, inventory and location of the business?
Q. What estate planning have you done in regards to your personal or business assets?
Q. Have special provisions with specific regard to your business been made in your legacy planning?