Planning for Your Business in the New Year
Many people use the start of the new year to set goals personally and professionally. As a business owner, you should also take advantage of this time to plan for your business.
Here are 5 tips to help you get started:
- Take Stock –
In my book, Designed Destinations, I talk about “The Size of the Pot” which urges business owners to know the actual current value of their businesses. Do you know the value of your business today in cash? What other income do you have outside of your business? It is important to know actual values vs. what your personal perception may be.
- Create or Update Your OCP –
A consciously designed Ownership Conversion Plan™ (OCP) ensures that you, the owner/founder, are in full control of a realistic and timely approach to passing on your business and leaving it in a manner and at a time that you choose, your Designed Destinations. Do you have a plan already in place? Have your goals changed? Is the timeline towards retirement realistic? Will you have enough money?
- Creating Your Personal Hedge (PH) –
Financial strength comes from building assets outside of your business. While far too few business owners have been able to do this, building other assets equal to the value of your business will prevent business downturns from disrupting your future personal financial security. Diversified assets can include other investments, personal savings, real estate, property rentals or leases and more. Achieving this goal will enable you to sustain the cash flow needed to maintain your lifestyle in retirement, regardless of the value of the business. And don’t forget to take advantage of unique tax planning opportunities available to private business owners.
- Build Your Team –
You will need a Core Team of advisers who will include a Financial Advisor, a CPA, and Corporate Legal Counsel, along with other experts who may be called upon to advise on specific areas of expertise. It is critical that your team works together and has access and information on all of your assets and liabilities. This information will be utilized to evaluate what needs to be done in order to support your Designed Destination.
- Document, Document, Document –
It may be implied that your business will pass on to your children, but it needs to be on paper to clarify what percentage each heir holds, what their responsibilities will be and what to expect with the transfer of business. Therefore, planning isn’t complete without documentation. It is equally important to document the full assessment of all areas of your business, making sure financial records and reports are kept up to date. Keep organized records of incorporation papers, permits, licensing agreements, leases, customer and vendor contracts, and any other agreements and relationships that may impact your business.
These five steps certainly don’t cover all areas of your business but they are a good start to helping you prepare for the coming year and beyond. To learn more about my full 7-Step Ownership Conversion Plan™ you can purchase Designed Destinations via Amazon or Barnes & Noble.