Strategies for business owners often focus on current challenges and specific financial products and usually fail to coordinate solutions that address the key issues all business owners face.
When planning for your business, all paths should lead to the ultimate exit of your business. And while you will eventually leave your business (you will), our experience has been that most haven’t planned for it.
At least not how they should be planning.
In this article, we’ll help you understand the three ways you can adequately plan for your business to better protect, grow, and exit your business on your own terms. Terms you’ve planned for.
3 Ways To Adequately Plan For Your Business
Three facets are necessary when it comes to planning for your business, or at least they should be, – protection, growth, and your exit. The thing about these areas is they mean different things based on who you’re asking. When you’re asking us, protect, grow, and exit, are the three legs to your stool. Moreover, without one of these legs, your stool will undoubtedly fall, or at the very least, be unbalanced.
#1 Protect Your Business: An Investment Worth Making
This business that means so much to you provides you with the necessary cash flow today to fund your lifestyle – whatever that may look like.
And to get your business where it is today, you were willing to take on business risks. That risk needs to be protected. The right way.
Protecting Your Partners
The right Buy-Sell Agreement for your scenario is one of the most critical tools for protecting your business and its stakeholders. This legal document will outline exactly what happens in the event of your partner’s departure, disability, or death. It helps to ensure a smooth transition of ownership – avoiding internal disputes, and financial turmoil by setting and communicating clear terms for buying out or redistributing your partner’s share.
Protecting Your Family
We’re willing to bet you’re not building your business just for the fun of it. (Though we do hope you enjoy it). You’re putting in this work for your family’s sake. And your family’s financial future is directly tied to the success (or lack thereof) of your business. Without proper plans, all that you’ve built for them could be at risk if unexpected events do arise.
This is where your Business Valuation comes into play. A Business Valuation is essential for understanding the true worth of your company. Not what you think or hope it might be worth. This ensures that, should anything happen, you’re not undervaluing or overestimating your business when making critical decisions about inheritance, sales, or estate planning. For this reason, your Business Valuation should be regularly updated to continue providing a clear picture of your business and its financial health. You can help your family in the future by establishing this today.
Protecting Your Key People
Losing a key employee, regardless of how, can be financially devastating to a company. Those employees who have a disproportionate impact on your business are the employees you need to protect. Their unexpected departure, whatever the reason may be, can unravel your business operations and continuity.
Ensuring these key people are taken care of, beyond basic benefits, fosters loyalty, stability, and continuity for your business. Implementing retention and incentive plans and including provisions for their roles in your Buy-Sell Agreement can provide protection in the event of their sudden departure or incapacity. This can help your business stay resilient during periods of transition.
By taking steps to protect your business through the right agreements, valuations, and planning tools, you’re not only safeguarding your financial investment—you’re creating a legacy of stability and success for everyone involved.
#2 Grow Your Business
Key people bring us perfectly to growing your business. We know as a business owner you’re focused on the bottom line – growing your revenue, and rightfully so. But growing your business is about more than cash flow projections, a marketing plan, or adjusting costs on the widget you’ve created.
It’s about your people. Your key people have a huge effect on your growth. So, while your marketing efforts and cash flow cultivate growth, your key people will be the reason your business will impactfully grow and better yet, sustain that growth over time.
And that’s what we focus on.
Choosing Your Key Employees
Choosing key employees is one of the most impactful decisions a business owner can make, yet many business owners fail to properly do this. This can be for many reasons including a narrow focus on immediate needs, failing to delegate tasks, or simply neglecting to nurture top talent.
Let’s think about your employees.
Who are those pivotal drivers of productivity, innovation, and leadership within your organization?
Who has a strong sense of ownership in their role and treats your business success as their own?
We’re certain we know the characteristics of the key employee you’re thinking of. Now, how can you retain them to grow your business?
Retaining Your Key Employees
According to a study by Gallup, the cost of replacing an employee can range from one-half to two times their annual salary. Moreover, in another study, Gallup found that over half of employees who quit said their organization could have done something to prevent it.
We know it’s not that you don’t value your employees, you just might not have a true retention strategy in place. And that’s what we help you focus on.
Retaining your key employees is possible when you go beyond basic benefits. And yes, offering a 401k match is a basic benefit. The best type of retention plan must be:
- Substantial
- Deferred
- Emotional, and
- Recapture costs
When you can determine the right strategy to retain your key employee(s) you are able to become inconsequential and increase your business value and its saleability.
#3 Exit Your Business
Now, exiting your business might seem pretty straight forward since there are three paths you can take:
- You sell to an insider
- You sell to a third party
- You keep your business until death
The problem is people don’t know what they don’t know. And if you desire an inside sale, for example, because your child or employee wants to own the business, but you know they don’t have the money, you might write this option off. But there are ways to make an inside sale happen, even when it doesn’t seem sustainable or even practical.
Moreover, keeping a business until death is a choice that business owners make every day without even realizing it. This passive option allows you to keep all the cash flow and profits all while not worrying about selling or exiting your business BUT business risks can quickly make this “exit” feel far from an exit or retirement.
In addition to deciding on an exit path, you need to look beyond the actual sale. Your desired path can have many variations, and you need to fully understand the implications long into your retirement. These areas include:
- Tax and legal matters
- Post-retirement income
- Deriving cash flow
For these reasons it’s not only important to begin planning for your exit well in advance, think 5 to 7 years, but it’s also crucial to find and implement avenues to maximize your business value.
Be Prepared To Sell Your Business
Planning for your business through your exit is essential to providing yourself with the necessary cash flow for your retirement.
When business owners go through our protect, grow, and exit process they, more often than not, find they are able to sell their business sooner than they had imagined. And for more money. That’s a win-win.
And since we know you’re busy running your business, you need a dedicated professional who will bring your attention to the areas you’re not looking towards.
To get started reviewing what you currently have in place and what blind spots exist, talk with an advisor at Consolidated Planning.
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Exp. 1/2027
Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
This material contains the current opinions of Ben Decker and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries.
