Posts by Tim McDaniel, CPA/ABV, ASA, CBA, Director of Business Valuation Services:
- Draw up a buy-sell agreement.
Why: As the last will and testament of your business, your buy-sell agreement dictates will happen if a shareholder dies, becomes incapacitated, retires or is fired from the business.
- Secure contracts for all key employees.
Why: What would you do if one of your key employees left and took your customers and other employees with them? Before your worse-case-scenario has a chance to materialize, address your concerns in the form of a contract.
- Have a succession plan.
Why: Your company’s value could take a hit if you were to unexpectedly be absent from the business. Select and train your replacement sooner rather than later.
- Comply with government regulations.
Why: Some violations could cost your business hundreds of thousands of dollars – or more.
- Protect your intellectual property.
Why: Your ideas are valuable, especially if your ideas form the foundation of your business. When you protect your intellectual property with patents, copyrights and other legal agreements, you are protecting your business’s value.
- Secure proper insurance coverage.
Why: Without the right coverage, a single lawsuit, accident or natural disaster could take your business’s value to zero.
It’s human nature to do everything we can to protect the people we love and the property we value. From drawing up legal documents to purchasing the newest safety products on the market – we are always looking for ways to protect what’s ours. Hopefully, this same mindset governs your business’s risk-management strategy as well.
Do you know that most of your net worth is tied up in your business. That means, if you don’t adequately protect it, you could stand to lose nearly everything you’ve spent your life working for.
Columbus Business First recently published my six tips to help business owners protect their most valuable asset. I encourage you to check them out here as well.
Want to learn more about how a business valuation can help you grow and protect your business? Check out my website at www.knowandgrow.com. You can also follow me on Twitter for helpful business tips throughout the day.
Are you looking for more ways to protect your business? These articles could help!
It seems like when the holiday season comes around everybody does their best to put their best foot forward and to portray the image of “the flawless family.” From the turkey dinner on Thanksgiving, to the Christmas cards featuring happy, loving families – we do all we can just to make sure everything is … perfect.
Listen to the podcast: How To Ruin Thanksgiving Dinner
The holiday season is also notorious for other less-than-perfect qualities, such as family fights, holiday shopping stress and, ultimately, increased depression and anxiety.
Now imagine you are battling the normal holiday stressors while trying to manage a family business. And what if your business is in crisis mode and your life, the future of your family members and the sustainability of your company hangs in the balance?
When you own a business with family or friends you already run the risk of business matters spilling over into your personal affairs. But when you haven’t invested the time and resources needed to plan ahead, you are leaving your business and your family vulnerable. Take control of the future of your business and the general well-being of your family all year long by knowing the true value of your business and investing in a proper buy-sell agreement.
Learn more about the importance of securing a custom business valuation and buy-sell agreement. Listen to the “How To Ruin Thanksgiving Dinner” podcast on Unsuitable on Rea Radio at www.reacpa.com/podcast or on iTunes or SoundCloud.
You’re busy serving customers. Managing employees. Overseeing the day-to-day operations of your business. Stepping down as the head of your company may not be on your radar, but sooner or later you’ll need to think about what will happen to your business once you’re out of the picture. We recommend that business owners start thinking about their business succession plan at least five years before planning to implement it. Read the rest of this entry “
If you’re a business owner, did you know that you can significantly increase your net wealth by simply changing the way you look at your business? Read the rest of this entry “
Last year, I was consulting with a client who owned a business that was worth over $20.0 million. He said that one of his advisers told him “Why waste your time and money developing an exit and succession plan? You will be dead and won’t care and let others take care of it after you die.”
I guess that’s a good plan – if you don’t mind the chaos it creates for your family members and if your legacy is not important to you. Read the rest of this entry “
Exit strategies are the options that you have to leave your business. There are only a few exit strategies that Ohio business owners can choose from and each will provide you with a different level of proceeds when you leave. All strategies will require planning and time to implement.
It’s never too soon to start planning your exit. You will eventually leave your business, and it’s better to do so before a life-changing event forces you out. The sooner you plan, the more options you will have. Read the rest of this entry “
One of the most basic individual investment principals is the concept of diversification. As an investor, diversification can protect you from a large drop in your portfolio due to the poor performance of any one investment.
If you own a business, the business value is most likely more than half of their entire net worth. You cannot simply call your investment advisor and quickly sell a part of your business to diversify. It is possible to sell a partial interest in a business, but this is not available to all business owners and requires significant amount of planning.
So, what can you do to protect your net worth from dropping from a large decrease in the value of your business? Read the rest of this entry “
2012 Gift Tax Exemptions and Business Planning
As you go about your day-to-day work within your business, you might not be thinking about what will happen when it’s time for you to leave the company. However, recent changes in the gift tax laws have created a window of opportunity that could allow you to transfer more of your business interests for less tax liability than at any other time in history. Read the rest of this entry “
You’ve worked hard to build your business and probably can’t imagine a time when it won’t be a major part of your life. But, someday, you’ll approach retirement and you’ll want to spend more time enjoying your life and less time balancing your books.
Maybe you’ll want to leave your business to your daughter. Maybe you’ll want to sell it and cash out. Either way, business transition doesn’t just happen. It isn’t serendipitous. You need a “get out of business” or succession plan. Read the rest of this entry “
About 25 percent of businesses fail within the first year, according to Small Business Trends. Only 44 percent survive for four years. What if your business doesn’t make it?
If you don’t have a buy-sell agreement, things could get hairy. Or if you developed one in haste and never update it, the buy-out probably won’t be fair to all parties. The hassles from litigation that result from faulty buy-sell agreements could last for years and negatively impact your business. Read the rest of this entry “