Business Exit Planning

Fred Crooks — Fri, 27 Apr 2018 10:00:23 +0000

Business Exit Planning – Planning with the End in Mind

There comes a time for every small business owner to exit their business. Properly positioning your business to be sold can be one of the most rewarding aspects of being a business owner, but also one of the most challenging. Failing to plan for the sale or succession can lead to a disappointing, and sometimes catastrophic, ending to what has been an otherwise successful and fulfilling business career.

When it comes to developing a business exit plan, those who have worked with some kind of business or strategic plan in the past are at an advantage. Regardless, putting together a workable exit plan is not an impossible task.

Start with a self-evaluation of your personal and business needs, goals and realities. The three areas to consider are:

Owner Readiness

Company readiness

Wealth preservation

Owner readiness

Are you personally ready to sell? Selling, or even planning the sale of your business, can be a very emotional event. Giving up something that has been part of your identity and self-image for what may have been decades is never easy. Start to prepare emotionally by asking yourself: How will I feel when I sell my business?

The planning process should allow you to identify and consider all business exit or succession objectives and alternatives. If you are considering the sale or transfer of ownership to a family member, there are additional issues to be addresses as opposed to sale to a third party.

Company readiness

Evaluate your liabilities and personal obligations. Here we are talking about current loans, future tax liabilities, legal obligations and even future financial commitments. Ask yourself what funds will be needed and available to meet these obligations both during and after the sale of the business. This assessment will help determine if you are financial position to sell, or when you will be.

Wealth Preservation

Complete a long-term financial plan. The financial plan generally looks at current assets and any assets created from the sale of the business. These assets are then compared to a number of factors like inflation, lifestyle, age and return on investments to determine if the assets will be sufficient for you to retire comfortably as a result of the sale.

How to start

Taking the first step is not easy. One of the reasons why business owners’ delay or neglect entirely the exit planning process is that they are not sure how to start the process or who to call for help.

We can provide you with a no cost, no obligation evaluation of your business and personal financial situation to identify and explore potential business succession and exit planning opportunities.

Our Business Succession Evaluation is a tool to provide you with a comprehensive, confidential analysis of your current situation or existing business plan by a qualified business planning expert. The process begins with considering your business and financial objectives and goals.

Contact us at Checkbox to get your plan in place.

Sources:

Six Steps to Small Business Success

Jenkin, R. The 10 Trillion Opportunity

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IRS Crackdown on Small Business Underreporting

William Simi — Thu, 26 Sep 2013 16:38:25 +0000

The IRS has recently begun cracking down on small businesses. Nearly 20,000 small business owners have received notifications of possible income under-reporting since fall of 2012. The notifications have come in light of an IRS analysis that compares percentages of gross receipts from cash transactions versus credit card transactions. If the ratio is different than what they would expect, they send out a notification.

This can be a serious issue if you don’t use great care in your bookkeeping. Many of the businesses that receive these notifications are able to go back through their books and provide explanations as to why the ratios are off. Internet sales, for example, would result in higher numbers of credit card transactions versus cash. A change in tax ID number may also set off alarms. There are a number of perfectly valid reasons that the ratios could differ. The IRS allows businesses to explain and fix errors in their reporting. Because of this, small business owners need to be particularly careful in their documentation. If your numbers are different than industry averages, you need to be able to explain why.

While some argue that cracking down on small businesses – the backbone of America’s industry – is not the answer, statistics are speaking otherwise. The IRS has found that more than $450 billion in taxes goes uncollected. Of this, nearly a third of that can be accounted for by under-reporting in small businesses. The IRS wrote that the goal is to “ensure that people who are non-compliant don’t get an unfair advantage over those that play by the rules and follow the law.” As long as they are careful in their bookkeeping, this crackdown can actually be a benefit to small businesses around the country.

Sometimes a second pair of eyes reviewing your bookkeeper’s work can reduce the crackdown you see above. We can schedule a free business consultation with you to review your current methods and develop a lasting partnership.

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Business Exit Planning