Has Your Business Outgrown Your Financial Advisory Team?

Things can change a lot for a business over the course of a few years. Your customer base might significantly increase over that time—and your income and expenses might too. You might add new employees, invest in new equipment, buy a new building, or even open up additional locations.

If your business has grown substantially in value and complexity over the years, you have much more to steward, protect, and take care of. It would only seem logical, to ask yourself if you also need to step up the capacity and capabilities you are tapping into through your professional advisory team. And yet, many business owners never ask this critical question and take this important step.

Most business owners rely most heavily on their CPA, and this makes good practical sense to some extent. Ideally, however, you should have a team of advisors who work collaboratively on your behalf, communicate regularly, and are supporting you around a comprehensive tax, financial, and even estate plan that they have jointly worked with you to create and refine over time.

In order to get the value from your business and ensure you are protecting what is often your most significant asset, both while you are leading it and after you transition onto something else, you want access to trusted financial professionals who can help you with everything from tax planning to business advisory to personal wealth management to strategically exiting your company.

As you head into a new tax year, now is an ideal time to take your planning to another level for the future.

3 Things to Think About When it Comes to Your Business’s Financial Future

As you personally consider this idea of evolving your current professional team and planning, here are some things you may want to consider:

1. Manage Your Business Like Your Personal Wealth and As A Source of Personal Wealth

The standard fee we all pay on our investment advisory or management fees range from 1-2% annually. While paying investment professionals for their financial advice, experience and know-how is the standard when it comes to personal assets or investments under management, this is not usually an approach that is similarly utilized in managing an owner’s most often significantly more valuable business interest/asset. If you are working with a strictly investable asset professional—as opposed to a more holistic wealth manager who advises and helps you manage more comprehensively all your assets—including your business, you may have a poor match for your needs.

Why not think about this, across all your assets, the same way and budget 1-2 percent annually for professional fees to help you get the expertise and leverage to manage your financial success, risk, and opportunities, as well as you possibly can? Or, certainly, at least as well as you are doing for your investable assets.

With all the energy, money, and chunks of your life you’ve invested into your business for so many years, it makes good sense to put the same effort and commitment into building personal wealth in addition to business wealth. We call this harvesting and it starts with a more robust and ambitious personal financial and legacy plan. Once you can articiulate (with your spouse if you are married), what you most care about and want to impact with your life and your money, you can answer the question how do I get from here to there?

If you can clearly articulate your annual savings goal, you can then begin executing on a disciplined and automated plan to generate and distribute the needed cash flow. If you can be successful in doing this, unlike most owners who don’t, you will have built a financial future that is not dependent on selling your business when and for how much you may desire. Your financial freedom can be assured, and you will have also realized additional freedom to more fully and patiently consider all your options for business transition and perhaps sale.

2. Make Sure You Have a Buy/Sell Plan if You Have Multiple Owners

Does your business have more than one owner? If so, then buy/sell planning—for retirement, dissolution, and death—is really critical. Unfortunately most buy/sell agreements these days either don’t exist or they’re not worth the paper they’re written on because they’re drafted so poorly.

The thing we see a lot with multiple owners who need a buy-sell agreement is it’s like watching paint dry to get them to sign the document. One owner doesn’t like this thing. Another owner wants to change that thing. And the agreement just keeps getting kicked down the pathway and never gets signed. Make sure you get something signed. You can always improve upon an existing document, but if there’s no document in place, you have no protection.

Perhaps the most important provisions of your buy-sell agreement will be the valuation provisions. The biggest source of litigation, cost, delay, and headaches, results from owners not agreeing in advance how the business will be valued, after death, disability, retirement, or even just when one owner wants to be bought out by another. At a minimum, take the time to ensure you have well-crafted provisions around your method for valuation.

When you’re crafting a buy-sell agreement, make sure you work with someone who has expertise in this area of planning, and someone who has significant experience in exit planning, partnership and shareholder agreements.

3. Retain Your Leadership Team For Increased Value

The most critical aspect of maximizing your value in the event of an ownership transfer—particularly in a third-party sale—is ensuring the buyer that your leadership team is going to stay put. If the new ownership group isn’t confident your leadership team is able to be retained, that can result in a shaky company and a shaky valuation.

So what can you do to ensure your company does in fact retain your key employees and leadership team during a transition?

Things like non-qualified deferred compensation plans and stay bonuses (where executives will receive a bonus if they stay after the sale) can substantially enhance value. Unfortunately too many owners—because they haven’t grown in their financial knowledge as the company has grown or don’t have the right financial professionals around them—do very little to ensure they can even retain their key people from other companies poaching them let alone keeping them around after a major transaction. But this is an important step to take.

The key takeaway here is this: The single best thing you can do as a business owner is plan for your exit. 

Even if you don’t have an exit specifically in mind right now, it’s still a smart move to have a plan. Make sure you plan with intentionality to maximize value and protect yourself from the things that can detract from value.

The way to do that is to work with an exit-planning professional and actually produce a written exit plan—just like you would produce a written estate plan for your family or a written business plan for your business. Having a written exit plan will ensure you have a clear path forward when you do decide to walk away from your business so that you and your family can get the most value for everything you have built.

Is it time to take your business and personal wealth planning to the next level? Talk to our professionals at Wealth Impact Partners today. We’ll help you look at all dimensions of financial planning for your business and your personal life—since your business is such an important and valuable asset, and such a huge part of you making your biggest and best impact with your life and your money.

The information provided has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed, nor does it constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.


The material contained herein is for informational purposes only and is not intended to provide specific advice or recommendations for any individual nor does it take into account the particular investment objectives, financial situation or needs of individual investors. Any tax advice contained herein is of a general nature and is not intended for public dissemination. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. This advice is being provided solely as an incidental service to our business as insurance professionals and investment advisors.

Neither Wealth Impact Partners, Valmark Securities nor its affiliates and/or its employees/agents/registered representatives offer legal or tax advice. Please seek independent advice, specific to your situation, from a qualified legal/tax professional.

Securities offered through Valmark Securities, Inc. Member FINRA/SIPC. Investment advisory services offered through Valmark Advisers, Inc., a SEC Registered Investment Advisor. 130 Springside Drive, Suite 300 Akron, Ohio 44333. (800) 765-5201. Wealth Impact Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc. BSW Inner Circle and AES Nation LLC are separate entities from Valmark Securities and Valmark Advisors.

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