When business owners think about planning for a successful future, they sometimes believe that it will take years to reap what they sow. This can make it tempting to push such planning off to an indeterminate future date.
However, strong planning can help you achieve success both later in your business career and right now. Here are a few strategies that may help strengthen your business immediately, in addition to allowing you to plan for your eventual business exit.
Know your financial independence number
The amount of money that will allow you to achieve financial independence is something that you can and should begin determining right now. Knowing this number can help guide you toward the most effective strategies to achieving your business and personal goals.
To calculate this number, you’ll likely need the help of several advisors.
A financial advisor can help you determine how much money you’ll need after you leave your business and how to best invest your funds to allow for a comfortable life. Often, business owners underestimate how long they’ll live, which can put them in a financial bind later in life.
Beginning this kind of planning now gives you more opportunities to invest and reach your financial independence goal successfully. The earlier you invest, the more you can potentially make.
You may also seek the advice of a tax professional. Minimizing your tax burdens is another important element of reaching financial independence.
Another advisor to consider is legal counsel. Your lawyers can help you plan your estate and implement business continuity strategies in case something unexpected happens to you before your planned exit. Facing these difficult conversations head on may help you understand where the strengths and weaknesses lie in your business, providing more time and opportunities to enhance your strengths and shore up the weaknesses.
Find next-level management
In many cases, a next-level management team is the key to positioning business owners for success both now and in the future.
No matter when you intend to exit, whether by choice, death, or otherwise, there is value in having a business that runs well without you. This is generally true whether you decide to sell to a third party or transfer the business to an insider. That’s because next-level managers make the business less reliant on just one person (in this case, you) for success. When a company doesn’t live or die based on the owner, potential buyers may see more value in that business.
Spreading responsibilities among highly qualified managers provides more time to focus on the responsibilities you’re best at and those you most enjoy. This, in turn, could give you more clarity about your vision for a successful future, while still achieving your short-term goals.
But how do you find next-level managers? A business consultant or coach may have the skills to identify internal employees who can become successful next-level managers. You may also want to use resources to recruit outsiders who can step into the role.
Once you’ve appointed next-level managers, your financial advisors and accounting team may help you craft plans with ambitious but achievable goals for these next-level managers, including tools such as vesting bonuses, written guidelines defining success, and golden handcuffs, that keep these managers on board during the transition and after you leave your business.
Create a Business Continuity Plan
Sometimes, even the best laid plans go awry. Having a set of business continuity instructions could help you uncover hidden weaknesses in your business, allowing you to put effort into turning those weaknesses into strengths.
For example, consider who would run the business if you were forced to suddenly leave before you were ready. Many business owners realize that if this were to happen, there may not be anyone in place who can run the business. This can lead to a domino effect, where both your family and the business struggle to survive.
Business continuity instructions can help address these weaknesses proactively. In addition to the more obvious long-term benefits, doing so has short-term benefits such as increasing business value and efficiency.
Business Continuity Plans can reduce the chaos of the unexpected exit of a business owner, especially for family members who may inherit the business without any training or desire to lead it. This guidance can help keep the business running smoothly, even in your absence, while putting family members at ease.
With help from your financial advisors, lawyers, accountants, and dedicated exit planning advisor, it’s possible to create a Plan B in case unexpected events derail Plan A.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you have questions on this topic, we can help with more information or a referral to another experienced professional. Please feel free to contact us at your convenience.
Imagine a world where your financial advisor, attorney, accountant, insurance specialist, and property/casualty advisor all worked together, like a board of directors on your behalf. This is the type of Collaborative Advisory Team approach we take in our practice. For many driven entrepreneurs, executives, and high-net-worth individuals, a Collaborative Advisory Team of professionals is the most effective and efficient way to achieve your optimal financial world. At Moneta, we’re reinventing the way you experience wealth management.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm. We appreciate your interest.
Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
© 2024 Advisory services offered by Moneta Group Investment Advisors, LLC, 100 South Brentwood Blvd., St. Louis, MO 63105 (“MGIA”), an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment advisor does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax, or legal decision. Past performance is not indicative of future returns. You cannot invest directly in an index. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise. Trademarks and copyrights of materials linked herein are the property of their respective owners.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
The Chartered Advisor for Senior Living (CASL®) designation is conferred by The American College of Financial Services.
©2020 Business Enterprise Institute, Inc. All rights reserved.
