Benjamin Franklin is credited with the famous quote "the only certain things in life are death and taxes." While no one can accurately predict the future, there is a 100 percent guarantee you will someday cease to be the owner of your business. The event that causes you to exit your business is also likely to generate some sort of tax consequence.
There are many ways your ownership of your business can end, either during your lifetime or upon your passing. Some specific examples might include:
The reality is ceasing ownership of your business is inevitable. The question is, do you want to wait to see how it plays out, hoping for the best, or do you want to define your outcome?
Successful business owners understand that succession and exit planning is a good business strategy. It's all about maximizing the value of the business, so that upon exit, you're maximizing your payday or setting up the next generation of ownership for success. Along the way, you'll likely enjoy the benefits of value acceleration through increased profitability.
The winning strategy also includes careful tax planning. Tax planning aids in the value acceleration process by ensuring you are investing in your business rather than paying taxes. Tax planning isn't just about minimizing current year taxes. Done right, tax planning should be considered as part of your exit strategy to ensure the hard work you've put into the value of your business goes to you and your family, not the government via taxes upon sale or exit.
Value acceleration is often overlooked and underappreciated in the business cycle. Most owners are working hard each day to keep up with the whirlwind. Most assume if the top line is growing, the value of the business is growing, but this isn't always the case.
Our team assists clients by helping develop solid strategies to build the value of the business while you own it and capture the value when you exit it.
Habit number two of Stephen Covey's famous book, The 7 Habits of Highly Effective People, says to begin with the end in mind.
Business owners who are intentional about the outcomes they want to achieve regarding their exit from the business can exit on their terms and almost certainly will enjoy greater financial success throughout the journey towards the exit.
If you are ready to talk about strategic planning for your business that includes maximizing and capturing the value of your business, it's time to talk to an advisor at Blue Value Advisors.