Business Owners Newsletter

View and download the BEI 2023 Business Owner Survey Report regarding exit planning.

The Business Owner's Bucket List

Writing things down is an important part of achieving your goals, both while you're running your business and after you leave it. However, many business owners feel overwhelmed by the idea of writing down their post-exit goals and strategies. Some business owners say to themselves, "I'll worry about this when I need to." But this can be a trap that could create situations that are even more overwhelming down the road.  

How can you, as a busy business owner, begin planning for a successful future even if you aren't ready to exit your business? The answer, along with some unexpected benefits, could be to create an informal, written business owner bucket list.  

The $889,914 Question

A recent Supreme Court case, Connelly v. United States, made an important ruling related to succession planning for closely held businesses. Today, we'll look at what the ruling says, how it could affect you, and steps you could take to avoid paying more in taxes than is necessary. 

What Are You Doing After Work?

Many business owners have a fuzzy idea of what life looks like after they're done working. But fewer business owners have a plan for how they’ll reach the life they want after they're done working. 

Running a successful business is time consuming, so business owners often feel like they don't have time to plan for something that doesn't benefit the company. However, one of the best times to plan for a successful future is before it becomes necessary. 

Let's look at some of the common elements of a successful Exit Plan and how incorporating them into your business can help you in the short and long term. 

Preparing the Next Generation of Your Business 

Your business is likely a large part of your financial success. Even after you eventually leave your business, you may still rely on your business to achieve financial security. This often means that you need to prepare for the next generation of your business.  

Whether you plan to sell to a third party, complete a sale to a non-family insider, or transfer the business to a family member, there are several steps you can take to position yourself and your business for success after you no longer hold the reins.  

Building a Bridge to Your Successful Future 

Planning for a successful future often takes years. And even the most forward-thinking plans can run into unexpected obstacles that can add more time to achieving your goals—perhaps more time than you’re comfortable with. How can you minimize the time you need to achieve success while still maintaining control of a successful future on your terms? 

Let’s look at a fictional but representative account of how a business owner successfully moved toward her business goals on her timeline and how you can implement the same concepts to overcome time crunches. 

Handcuffing Key Employees NQDC Plans

Keeping key employees committed to your business is an essential strategy for building business value. It’s also a crucial part of planning for a successful future, including your eventual business exit.  

There are many strategies you can use to retain key employees. Today, we will look at some of the pros and cons of a non-qualified deferred compensation (NQDC) plan as a strategy to handcuff key employees.  

There's More to Value Than Revenue

Revenue and profitability are generally good indicators of your company’s strength. However, when it comes to planning for a successful future, they are far from the only things that determine your company’s strength. 

As you plan and perhaps approach your exit from your business, you may need to consider whether you have installed Value Drivers for your company. The presence of Value Drivers could enhance your ability to leave your business when you want, to whom you want, and for the money you need to succeed after your exit. The absence of these Value Drivers could impede your ability to achieve your goals.  

Pursuring Financial Independence Legally

Achieving financial independence is the most important goal for business owners who want to exit their businesses successfully. The importance of achieving this goal is so great that it may be tempting to take legally nebulous routes to achieving it.

Let’s look at a brief story about a business owner whose advisors got him on the right track to planning a successful future.

Getting Along with Your Advisors

A huge perk of running your own business is getting to do it your way. This can make planning for a successful future challenging for some business owners because they need to be comfortable with giving up control of certain aspects. And if they don’t agree with their advisors—or if their advisors don’t agree among themselves—it can become problematic.

Fortunately, there are ways to tackle this issue on your terms.

What Makes Your Business Attractive to Buyers?

Building a business that’s attractive to buyers is both a powerful way to pursue a successful future and a sign of its value. There’s generally one trait that makes businesses most attractive to buyers: self-sufficiency without its owner.  

Let’s look at how a business’ dependence on its owner made it worthless to buyers despite its other strengths, using a fictional but representative story. 

The Immediate Benefits of Long-Term Planning

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 right now in addition to allowing you to plan for your eventual business exit.  

Converting Your Buisness to a Non-Profit

Converting your business to a non-profit is a valid exit strategy. However, there are important things to consider if you choose this path. Here are a few things you should think about if you’re considering converting your business to a non-profit, using a short fictional but representative story. 

 

Reducing Risks in Risky Businesses

Founding a business is inherently risky. Fortunately, even the riskiest businesses have opportunities to reduce their risks and protect their interests with proper and early planning. Let’s look at a fictional but representative story of how an extremely risky business survived an unexpected accident.

Exit Planning Offer Assurance 

Running a business is one of the most fulfilling things you’ll likely ever do. Despite the time and money it costs you, you dedicate everything you have to position it to be successful. With all the effort you pour into your business, it’s prudent to dedicate time and money to protect it against risks and prepare, both yourself and your business, for your eventual exit. 

Here are a few ways that Exit Planning offers assurance that you have strategies to reduce risks and strengthen the business you’ve worked so hard to build. 

Hard Work Deserves Good Planning

A major point of pride for successful business owners is how hard they worked to achieve their success. A common myth is that smaller, less complex businesses aren’t cut out for Exit Planning or that it’s too expensive. But as the backbone of the economy, smaller business owners deserve good planning, and planning may not be as expensive as they think. 

Expecting the Unexpected 

Unexpected events often have bigger risks for business owners than many other people. Family members, employees, and even communities can face devastating consequences due to a business owner’s death or permanent incapacitation. Fortunately, there is a way to mitigate the risk of unexpected events wreaking havoc on you, your business, your family, your employees, and your plans for a successful future. 

7 Steps to Exit Planning Success 

All business owners eventually exit their businesses, by choice, death, or otherwise—no matter how successful, powerful, or high growth they are. And like building a successful business, a successful business exit is often the result of a strong plan, not wishful thinking or assuming things will fall into place. But what does that plan typically look like? 

What's Your Plan When Plans Change?

"The best-laid schemes of mice and men gang aft agley." -Robert Burns 

What should you do if a plan you made isn't working out? Let's look at how Exit Planning can position business owners to successfully adjust to changing conditions.

Change is OK: How Planning Makes You Focused and Flexible

As a business owner, you manage all sorts of complexity in your work. Goals, expectations, and the people who help you meet them may change. But even though things constantly change, you can still adapt, thanks to smart and focused business planning. After all, if your company couldn’t adapt to change, it likely wouldn’t be as successful as it is today.

Controlling the Uncontrollable Parts of Ownership

A common tragedy for business owners is facing a life-changing event, such as a sudden death or illness that devastates the business, without a plan. While these events may seem uncontrollable in the moment, the good news is that with foresight and planning, you can regain control over what seems uncontrollable. 

Let’s look at a short fictional but representative account to see the different consequences between proactive vs. reactive planning. 

How to Be Confident Amid Change

One of the biggest changes your business will inevitably experience is a transfer of responsibilities. 

Transferring important responsibilities to someone else can be exciting and nerve-wracking. Whether you’re transferring ownership to a family member, or departmental responsibilities to a long-time employee or next-level manager, you may want release valves for if things don’t go as planned.  

Fortunately, there are ways to hedge against risks while still pursuing these goals. 

How to Clarify Your Brilliant Processes

Many successful business owners are successful because they think about things differently than most people. Others may recognize your personal brilliance and say to themselves, “I wish I could understand how she does it.” 

This “secret sauce” can be a great differentiator. However, when it comes to planning for your successful future, it may also be a roadblock. 

Today, we’ll examine a few strategies that can help you leverage the methods that contribute to your unique success into a planning process that lets you pursue your goals on your terms. 

Dealing With Outside Expectations of Your Wealth

As a successful business owner, the people closest to you likely rely heavily on you. They may also have expectations regarding your wealth. Your plans for how you’ll disperse your wealth, and the expectations others may have, can have major effects on your future.

Let’s look at a story of how one business owner’s plan to use the wealth he had grown through his business was contrary to the expectations of those close to him.

How to Identify Internal Next-Level Managers

Next-level managers are an integral part of planning for a successful future. They can come from inside or outside of the company, and you often have a choice about where you find them.

Many business owners want to install next-level managers from within the business. But how do you know if internal managers are up to the challenge? Here are a few strategies to consider, along with the consequences they can produce.

How to Address Burnout

In our last newsletter, we broached the topic of burnout for business owners: 

In many respects, burnout is just a new term for mid-life crisis. But in some ways, it’s on a much bigger scale. Whereas you might buy a Corvette to quench a mid-life crisis, burnout can sap your energy to the point where nothing can motivate you. This, in turn, can have negative effects on business performance. 

When you grow a successful business, you may feel the effects of burnout. Even worse, you may feel them before you’re in a position to retire on your terms. Worse still, by the time you’re in the throes of burnout, you may not have the energy to address it! 

Today, we’ll present a process for addressing burnout within the context of planning for a successful future before it hits you. 

Why You Shouldn’t Do Everything

When you started your business, you might have done a lot of the heavy lifting alone. It’s something to be proud of. 

As businesses grow, they tend to become more complex. Many business owners one day realize that, try as they might, they simply cannot do everything all by themselves. Yet, there’s also a fire that might try to tell you, “I’ve done everything before, I can do everything again.” 

Today, we’ll present some of the benefits of letting others help you compared to some of the pitfalls of trying to do everything yourself. 

What Do You Want?

Business owners often know what they want from their businesses: growth, profitability, sustained success. And for many of those same owners, the business is a means to an end, not the end itself.  

But what is the “end”? You can likely answer “why” you started your business—you’re independent, you crave a challenge, it’s in your blood. 

When asked, many business owners struggle to answer the question, “What do you want from all this work?”  

Often, the answer to this important, guiding question comes out in planning for a successful future, like it did for one fictional but representative business owner. 

Building Value Outside the Business

Many business owners find the bulk of their wealth within their businesses. However, planning for a successful future often means wrangling financials outside the business too. This is especially important when markets may not be as favorable to small and mid-sized businesses as they have been in the past. Here are three things to consider to help you build value outside of your business.

Is This Plan Right for You?

A question business owners often ask about planning for a successful future is, “How do I know the plan my advisors are building is right for me?” It’s a good question, and one that we want to help answer for you today by explaining the process of planning for a successful future. 

Why Specific Goals Should Also Be Fuzzy

A longstanding credo for successful business planning is make specific goals. However, there is such a thing as being overly specific in your goals to the detriment of other things that matter to you. Let’s look at how adding fuzziness to specific goals can make your business planning strategies more fulfilling.

 

Keeping the Family Business Running and the Business Family Happy

Running a successful business is complex per se. Adding the element of “family” to a business often creates more complexities, especially as the business grows. Lifelong family bonds and expectations can run headlong into business realities and needs. Today, we’ll share some ideas about how to keep the family business running and the business family happy.

 

The Common Element Among Unique and Successful Businesses

Successful business owners may face a conundrum as they pursue success. “Though my competitors do something similar, they don’t do it the way I do it. So, how do I know the right way to achieve success, especially if I don’t do things their way?”

 

The Virtuous Circle of Improving Cash Flow

If cash is king, then cash flow is the kingmaker.

Cash flow can have a multiplier effect in terms of achieving your planning goals for a successful future. Often, increasing cash flow requires strong performances from key employees. Let’s look at how properly motivating your key employees could cause a cascading effect that creates a virtuous circle of increasing cash flow.