During the Start-Up phase business owners are typically focused on the basics. Cash Flow, Product or Service delivery, and building their staff. Planning essentials for this phase include:
• Health Insurance
• Property and Casualty Needs
• A Buy/Sell agreement
• Loan Indemniﬁcation
• Key Person Plans
These items give the owner the basic tools to protect the young business and also to attract and retain key talent at this critical point in the business life cycle by emphasizing the most important focus points of this stage: cost and efﬁciency.
During the Growth stage of the business, owners are focused on being more competitive. How do they improve their products, systems, and personnel to effectively capture more markets and proﬁts? Proper planning can aid in these objectives, especially in the personnel area.
Ideas in this space will include:
• Qualiﬁed Retirement Planning
• Golden Handcuff type plans
• Updated Buy/Sell agreement
• Basic Estate Planning
As the business grows revenue and overall value, it becomes more important to have these basic structures in place to protect the owners and employees.
The Maturity Stage of the business is the point where most owners begin to look at planning seriously. They consider generational and family issues which drive estate planning. Many are also looking at employees through a new lens. How do you reward those responsible for your achievements? How do you continue to attract the best people? When can you personally afford to slow down and enjoy what you built? Issues at this point will include:
• Estate Planning
• Supplemental Executive Retirement Plans
• Non-Qualiﬁed Deferred Comp
• Personal Tax Planning Strategies
• Long-Term Care Planning
After a successful career of growing and building the organization, the focus begins to shift to who can and will take over when you leave. Every owner’s plan will be different, but what is consistent is the need for a plan. Without a plan, you see ﬁghts and failures all too often. Owners should begin at least 5 years in advance of a targeted exit date to ensure the appropriate amount of time to properly evaluate both the “who” and the “how” of a well-executed business succession strategy.
Areas to be evaluated include:
• Stock Redemption Plans
• Outright Sales
Timing, taxes, costs, along with the “who” can signiﬁcantly impact the correct strategy for the “how” and the “when.”