As a business owner, are you in business for your business to be wealthy or are you in business so you can be wealthy?
A key area of focus for us is in helping the business owner. There are so many issues the owner faces on a daily basis in order to keep things moving that they frequently don’t have the time to really address the long term issues which are essential to their success.
Some of the issues could even impact the business’ ability to survive an event concerning the owner, partner or key person within the enterprise.
Business succession is one of these areas. We frequently hear talk of a Buy-Sell agreement and many businesses have one. When reviewed, some are found to be insufficient. Most deal with what would happen in the event of one of the owners’ death.
And then we have other issues which could impact the succession plan. What would happen if a partner gets a divorce? What if they become disabled? What if they get sued and have to file for bankruptcy? How about if they commit a felony? What if they just want to dissolve the firm?
What is the exit strategy for the owner? Sell the business? To whom will they sell? Do they want a child to enter the business? How do they retire then? As one can see, there are many issues dealing with business succession and they require a unique, well thought out strategy to bring about an orderly transition for the enterprise.
Key person issues are also important. Is there a key person, owner or otherwise, upon whom the success of the business depends? What would happen if they left or were incapacitated?
How do we reimburse the business for that person’s loss? How do we retain the services of that person, especially in a very competitive labor environment? Deferred compensation agreements could be the tool to help retain the individual and also help provide an ongoing stream of revenue for that person if they fulfill the term of employment and are ready to retire.
What type of retirement plan is suitable for the business? With the Pension Protection Act of 2006 there are many opportunities for business owners to explore different ways to handle the stream of dollars being used to fund retirement plans. As a business owner, are you in business for your business to be wealthy or are you in business so you can be wealthy? With the right mix of employees and highly compensated, there can be big swings in funds towards the key players in the business.