This is the test of whether you own a business or a job. Back in the days when I was in publishing, I read Robert Townshend’s Up The Organization, which told the story about how he grew Avis from virtually nothing to becoming #2 behind Hertz. While that book was about a big corporation and my publishing enterprise was in the small business category, there were some excellent lessons that I could apply.
Many small business owners assume they’ll find a ready and willing buyer – with cash – when the time comes; and it’s almost never true.
Many also never give much thought about what would happen if something bad happens beyond technical disaster-recovery concerns; but, there is another ‘disaster recovery’ issue too many ignore.
- If you had retired, died or become disabled yesterday, who would own and manage your business today?
- Would you want your business interest retained for a family member, sold or liquidated?
As I indicated, the ‘cash buyer’ is a fictional character in the small business market, even when the businesses are successful. If a family member wants to buy it, will it support two owners during the sale process? If an outsider is involved, who will handle the transaction? As someone who’s sold five businesses of his own, trust me, those ‘rule of thumb’ valuations aren’t worth much, either.
It’s good to get your ducks lined-up early.
|Objective||Issues to Consider|
|Retain the Business Interest for Your Family||
|Sell the Business Interest||
|Liquidate the Business Interest||
The objective of business continuation planning is to assist you in evaluating which of these alternatives is most suitable for your situation and to help provide the funds that will be needed to assure that your business continuation goals become a reality.
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.
The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.