Posted by Steve Beatty on Wed, Jun 22, 2011
The growth of any business is wonder of financial evolution. A business starts, becomes established and grows. Sometimes, that growth is phenomenal and becomes a golden goose for the owner and all who are involved. The outsider marvels at its pace and ability to increase exponentially as years go by. Many wonder: How did this happen? What is the secret?
Planning
Having an ultimate goal and plan in mind at the outset of a business venture is the best way to ensure success at best, and survival at worst. Financial markets, consumer confidence, supply and demand, health issues,competitors and basic economic forces are fluid. They can align to propel your business to the peak or cause it to plummet to the bottom. Planning for eventualities is the smartest approach while still keeping your eye trained on that ultimate goal of success. That's why pyramid planning works to help you maximize business value while protecting you along the way.
The Foundation
The pyramid is, doubtless, the most logical and rational of man-made structures. Applying its form to business growth is just as logical. Your business needs a base of support on the way to the top. A broad foundation to cover the "what ifs" ensures a safety net for any eventuality. Insurance coverage for both yourself and all assets is one component. An income flow to cover catastrophic health issues, debt reduction and potential legal problems are others. Many of these can be set up and function automatically to secure your life and business while you focus on the future.
Building Toward The Goal
Having a solid foundation among shifting economic sands now gives you a base to work from. You can begin to plow profits into retirement portfolios, rainy-day funds, investments and accounts for expansion as growth continues. This also helps you begin to maximize business value by expanding your market and improving services or products. With an array of investments, you now can begin to maximize business value by being proactive in your decisions.
Approaching The Peak
Keeping your eye ever trained on the ultimate goal, you continue to maximize business value by churning profits toward honing the edge of your venture. You also branch out your personal investments. This gives you a two-pronged advantage as business and personal assets grow. As better opportunities for growth loom on the horizon, you are more and more prepared to see and take full advantage of such opportunities through both your company and personal economic strength. Seizing the moment becomes only a matter of waiting for that moment. Your assets are protected and your financial security is growing.
The Capstone
Any business owner dreams of being able to maximize business value to the point that others want to buy it. This is a true mark of success. Once others see further growth potential in your business well beyond the purchase price, you know you have arrived. Proper planning and asset management has brought you to the point where your future is secure and your life is your own.
Posted by Steve Beatty on Wed, Jun 08, 2011
As a financial advisor for over 20 years, I cannot stress enough the importance of estate planning for business owners. While we usually do not expect our lives to end in the near future, we cannot predict what may happen. It's best to be prepared in advance so that survivors are not left in total devastation should the unexpected occur.
The Importance of Estate Planning
Because of my vast experience over the years, I can tell you that estate planning for business owners is essential. While your business may be running along smoothly at the moment, what would happen if suddenly you were not around to handle the details? Your survivors are left to handle some tough tasks and may have no idea what direction to take.
Take Action Now!
No matter how simple or complex your estate plan, it should be implemented as soon as possible. As an experienced financial advisor to business owners, I know that in many cases a significant portion of your assets or wealth are tied up in your business. This wealth is likely to be the biggest source of income for your family after your death, which is reason enough to plan ahead of time. You can save your family members a significant amount of stress and heartache by taking care of this now.
Keep The Future In Mind
Estate planning for business owners may involve a number of strategies, and there are many reasons that you should take action sooner rather than later. Minimizing taxes so that you do not lose the results of your labor to the IRS is one aspect to be considered. Buy-sell agreements, life insurance, whether you're a sole proprietor or family run business are other factors to consider, and often determine what steps are necessary in proper estate planning.
Whether your intent is for the business to transition to the next generation or to be sold upon your death, be advised that estate planning is a process that takes preparation, knowledge and expertise. This is not a process that can be accomplished overnight. In choosing an advisor, it is important that strong, long-term relationships are developed and maintained. You should feel that you can trust and depend on who you choose to effectively manage the planning of your estate.
Protect Your Assets and Prevent Liability
In the case of a business that will end upon the death or retirement of the owner I can't stress enough that estate planning cannot be ignored. It is essential that steps are taken to ensure that no liability results from the activity of your business. In estate planning for business owners, it is essential that careful attention is paid to liability insurance, quality, contracts that are well-drafted in relation to liability and indemnification issues and the formation of an LLC or corporation in certain circumstances.
If you are reading this article I assume you are a business owner. I cannot stress enough how important estate planning for business owners is whether you are relatively young in the business arena or have been established for years. Avoiding or putting off estate planning is risky business.
Posted by Steve Beatty on Thu, Jun 02, 2011
As a business owner, your financial planning needs are complex, but with the demands that come with the entrepreneurial spirit, it's not always easy to find the time to conceive, create and execute the kind of comprehensive financial plan you need to enhance the security and health of your business. A good business owner financial plan encompasses the entire life cycle of your business, and includes everything from insurance and tax strategies to valuations and succession planning.
At the outset of the planning process, you have to decide whether you want to create your own business owner financial plan or hire an outside consultant to do so on your behalf. There are many advantages to hiring a financial advisor, including sound professional advice on topics like employee benefits, reinvestment of profits, asset management and exit strategies. Regardless of whether you decide to go with a professional advisor or create your own strategy, it's important that you have a thorough understanding of each individual aspect of a complete business owner financial plan so you can make a proper assessment of your own personal situation.
Broadly speaking, there are six major areas your business owner financial plan should concentrate on:
- Employee benefits and retirement plans. Taking care of the people who work for you builds morale and can boost productivity and, ultimately, profits. It's also important to offer attractive benefits packages so your business can draw in and retain highly skilled and qualified employees.
- Insurance. You should have an insurance policy that protects your business no matter what may come. Naturally, you'll want to insure your company's physical property, inventory and hard assets, but you should also give strong consideration to adding insurance against business disruptions and the loss of important personnel.
- Succession planning. Thinking long-term is the key to a successful business owner financial plan, and this considers exit strategies. Having a succession plan ready to go ensures that those who take the reins of the business from your hands can step in immediately and keep all operations right on course.
- Tax strategies. As your business grows, your tax situation will change. It's important that you understand how to optimize the structure of your business to avoid unnecessary taxation and keep more of your profits in your pocket.
- Valuation. Planning for the future requires a firm hold on the current value of your business, as well as its projected value based on projected growth. This helps you make informed financial decisions not only about your business, but also your life.
- Asset management. Making the most of the assets at your disposal is the key to growth. You should have a complete strategy for optimizing the value of depreciable assets, leveraging assets to make acquisitions, and maximizing returns on any profits you choose to reinvest.
Applying these concepts requires careful assessment of your business' current financial situation, the ability to prioritize and anticipate future challenges, and taking decisive action based on an informed understanding.
Posted by Katie Bruce on Wed, May 25, 2011
Your business is doing well, you have built up a stable of reliable and trusting clients. Some have actually become loyal friends over the years. You have investments in them and they in you. You look forward to the daily contacts, accounting reports and forecast charts. But what about next year, ten years from now? How do you get out on top while taking care of your interests, your family, employees and customers? You need to give serious thought to exit planning.
Reasons for Exit Planning
A good exit strategy is just as important as a good business plan. One gets you in successfully, the other gets you out with the same measure of success. Planning early is key to your company's future health and survival. There are an number of reasons to develop a strategy early.
- Health issues can come up at any time. You need have a contingency plan that allows for a smooth transition in case of a debilitating health issue.
- Retirement time is coming and your future income will be at stake. You need to determine with whom you leave the business, and a percentage of the company's future income that comes to you. Inflation adjustment, family needs and tax shelters should all be considered.
- The rat race can get old. You may realize one day that you want out. Travel, more time with the family, another project you want to pursue or a bucket list can begin to weigh on your mind. When that comes, distractions take over and begin to erode your business edge. Exit planning that has been carefully framed can give you the graceful means of departing and pursuing other desires.
Seamlessly Passing the Torch
Your exit planning model is ultimately designed for you. However, those in your company have to be taken into account as well. When you leave the helm, who continues to steer the vessel with the guidance and passion to continue the journey you have begun?
- Children often become interested in a company's growth. If they have shown a desire to be an heir to your business, bring them in gradually and determine if they have a passion for the job.
- Faithful employees can be good stewards of your company. When you determine they should be involved in your exit planning, groom them for the transition ahead.
- If you have decided that you want to sell the company to an outside party, go out on top. Highlight the company assets and future earning potential. Show that the asking price is well worth the investment and leave the new owner with a sweet taste in the mouth for the purchase. Be sure you have shelters for the money; leave the IRS as small a slice of the pie as possible.
Make sure your exit planning takes care of you, your employees, suppliers and all others involved in your company's growth. When all loose ends have been tied, you can leave knowing that the business will continue to flourish and that old friends are in good hands.
Posted by Steve Beatty on Wed, May 11, 2011
I had a mini Facebook debate recently with an inspired, smart, successful business owner friend of mine. I had posed the question:
"An employee focuses on salary. A manager is measured by profit. An owner's value comes from the value of the business. Your focus?"
My friend's answer? "Net profit, the only thing that matters..."
In a sense, I agree with him. Net profit shows how well the machine called your business is working. It doesn't hide anything. Dig beneath the number and you can find the true story of the business's effectiveness or lack thereof.
As with most results, it is often harsh yet always fair.
But there is so much more available. To me, the real value of a business is what it contributes to creating the life you have always dreamed of.
What if you began with that? What if you started today, however many years you are in business, and painted a picture of what you want your business to look like when it is "done"? And I don't mean how much net profit.
I mean paint a picture of the financial freedom it will give you. Paint a vivid picture of the time freedom you will have created. Write about the way it will fulfill as many emotional needs of yours that you can think of: independence, making a difference, success as you define it (not the way others tell you it is defined).
Imagine if you set out to make the picture you create a reality. Two things might happen: 1. You fail; 2. You succeed.
I would submit that failing--while tirelessly working to create the picture of your ideal business and life--would be a beautiful failure. It would be a far cry better than succeeding doing what someone else thinks you "should" do.
Posted by Steve Beatty on Tue, Jan 04, 2011
It is essential that every business owner evaluate their firm to ensure that they are protected legally as well as positioned for growth and financial security.
We have put together The Essential Legal and Financial Planning Checklist for Businesses. This report offers a detailed explanation of all the important areas that can save business owners from heartache and losses. You will learn the keys to establishing a strong foundation for their success. It’s yours free. Simply fill in your information below and click the “Yes, I Want This Free Report” button and you’ll receive it immediately.
Posted by Steve Beatty on Tue, Oct 26, 2010
It is exciting to finally combine two things I love: writing and working with business owners
to solve problems and create amazing financial results. I hope this blog will be an inspiration and give you ideas that will help you take maximum advantage of the greatest asset in the world—your business.
I never imagined that I would be advisor to hundreds of business owners when I was a sports writer for the Colorado Springs Gazette Telegraph, San Diego Union and Los Angeles Times in my teens and early 20s. But I learned skills that have served me well today: asking probing questions that get people to think about themselves in a different way than they have before.
That really is the key to helping business owners help achieve amazing financial results.
1: Step one to going somewhere is knowing where you want to go. Sometimes that hasn’t been thought about for years—maybe never. But there was a reason why you got into business, an attraction, an excitement that got you to take one of the biggest risks you can take. Some dream got you to go into business for yourself.
What was that dream? Was it to have more money freedom? More time freedom perhaps? The lure of being your own boss? How about the legacy you would be able to create for generations to come? Whatever it was, how is it going? How are you doing at reaching that dream? When was the last time you thought about it?
There is no right answer. The more you think about what you want, what you strive for, what got you into business in the first place, the better chance you have of achieving it. I will challenge you to think about those questions, and remember the answers and get to work making that dream a reality through this blog.
2: Step two is to figure out where you are at. This is an area many of us have wanted to avoid in the last few years. If we are honest, more than 90 percent of us don’t have as much value to our business, top line, bottom line or excitement about building that value as we used to. It’s ok…we are in this together. And wherever you are at, you can take a step forward toward that ideal business and life. Be honest with yourself and take stock of where you are at in terms of sales, bottom line, accounts receivable etc. If you need help assessing value, I have some simple solutions to get an idea of what that might be.
3: From there, I can help you with step three: putting together a plan—a step-by-step action plan about how you are going to get from where you are to where you want to go. Not a traditional business plan, but a practical game plan that you can look at and make happen.
Sometimes you need to know what you don’t know. Sometimes you just need encouragement to hear that you can do it. I am good at both. You will see. Let’s get started on that road to your ideal business…