Put It in Writing

If money were no object, what would you do tomorrow? Only 28% of business owners said they would retire. More than half would continue working in their current businesses.1

That kind of job satisfaction is fairly typical of business owners, but it can also be a hindrance. Business owners who are consumed with the day-to-day demands of running a business may be ill prepared for the next phase of their lives — whatever it may be.

Even if you intend to stay in your current situation for decades, a written exit strategy could help you make important decisions about your financial future and the future of your business. An easy way to get started is by answering some simple questions.

When? Just about any answer is acceptable as long as it’s not “never.“ If you are among the 47% of business owners who plan to work until forced to retire for health reasons, at least make an attempt to guess when that might occur.2 Your current health and family medical history may help guide you. Setting a tentative timetable could help you allot enough time to find an appropriate buyer or train a successor — tasks that could take months or even years.

What (and “what if”)? Defining what you might do in your next phase of life could help you set appropriate financial goals. If you expect to open another business, your needs and goals would likely be different from what they would be if you intend to retire. Ask yourself what could happen to your family’s financial situation and the business if you were to become disabled or die unexpectedly. A well-structured exit strategy could account for such contingencies.

How much? If you don’t expect the sale of your business to provide enough money for your next move, how will you make up the shortfall? Conversely, if you expect the proceeds from the sale to be substantial, you may need to start considering ways to manage the tax consequences.

The answers to these questions may help form the basis for a written exit strategy. If you don’t have one, or if you need to update yours, we can help you get started.

1–2) Gallup, 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.
New Century Financial Group
118 Wall Street • Princeton, NJ • 08540
Phone: (609) 924-2049 • Fax: (609) 924-0649
• roring@ncfg.com

 

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