Harbor Pilots provide a valuable service to the Gulf Coast by serving the shipping industry via public ports, private oil terminals and industrial complexes, all of which are economic lifelines and gateways to world commerce. For more than two decades, we have been serving this unique and storied profession.
The majority of pilots begin their new careers without experience in navigating the complex tax, debt management, investment and other financial decisions and responsibilities they will face as business owners. We have designed a roadmap for pilots by developing a checklist that provides clear financial guidance for every stage of a pilot’s career.
Growing a business is a difficult undertaking today as business owners must confront a myriad of tax laws and regulations while trying to effectively create products or services, manage their employees, develop and cultivate clients, and do so profitably.
Often times business owners are too absorbed in their business to tend to their own financial needs, and they may also overlook key planning considerations that could help their business grow and prosper. Also, the livelihood of a business owner can be imperiled when unexpected events occur that adversely affect the bottom line of the business.
Business Owner Needs
For many business owners, their business is their primary retirement asset. After many years of building a successful business they expect to convert it to an income for retirement by selling it. If they are relying upon the business as their sole means of retirement, they run the risk that it may not attain the value needed to produce the needed income.
Businesses can fail. Businesses can lose value in certain economic cycles. The timing is not always right to sell a business. Many times, the true value of the business lies in the talents and good will of the business owner who won’t be around to run the business after he retires.
Business owners have access to a number of qualified and nonqualified retirement plan options that can provide a cornerstone for their retirement income needs.
"I’ll figure it out when I’m ready to retire."
That is the response we get from small business owners when we ask how much their business is worth.
The wealth of nearly two-thirds (70%) of all small business owners is tied up in their business. For many of those individuals, the business becomes the personal retirement savings vehicle. Those individuals, however, could be driving blind. Without knowing the value of the business, how will they know when they can stop working or the lifestyle to expect in retirement?
Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:
- Increase value.
- Capital infusion.
- Mergers, acquisitions or share-swaps
- Dissolution of partnership or partial exit by an owner.
- Tax strategies.
- Employee incentive programs.
Traditional business valuations involved an extensive, expensive, and seemingly invasive process. Thanks to innovative technology, however, those barriers no longer exist. An online valuation cost a fraction of what traditional business valuation specialists charge, and can be completed in minutes, not weeks.
While business owners are often stretched for time, when it comes to discovering how much the business is worth, there’s no time like the present.
Our firm specializes in meeting the financial needs of small business owners, and business valuations is a critical step in our process. To get started on your business valuation, simply go to https://www.fmwdickersongroup.com/products-services/business-planning or give us a call (409) 234-8546.
When a business partner dies, the business loses a valuable asset and could suffer in the short term. The long-term issue for surviving business owners is whether the business can survive when the partner’s family members show up for their interest in the business.
For the families of business partners, the business interest is often their biggest asset and they become the rightful owner of that interest at the death of the partner. They will want to receive their share of the business, either in direct compensation or through their participation as an active partner in the business.
If the surviving partner does not have the capital to compensate the family for their share, their options are limited and not very attractive. A business succession plan can provide for the orderly transfer of the business interest from the deceased’s family to the business.
Key Employee Protection
One of the more devastating events a small business can suffer is the loss of a key employee. Often times it’s a key employee who brings a special talent to the business and is responsible for much of the success of the business owner. The loss of such a valuable asset could set the business back for a period of time, and at tremendous cost, while the business owner seeks to find a replacement, if one can be found at all.
In financial planning, we are taught that it our most valuable assets – our home, our ability to earn income, our cars – should be insured against an unexpected loss. It’s no different for business owners as the loss of a valuable business asset could imperil the business.
Buying life insurance coverage on a key employee makes good business sense. The amount of coverage should be enough to cover the costs of recruiting and paying a replacement, loss of earnings to the company, any redemption of stock or a salary continuation plan arrangement with the surviving family.
In a small business setting, it could take years to find or develop the executive talent needed to build the business to the next level. Executive talent is hard to come by, and it is even more difficult on the business when it walks out the door in pursuit of another opportunity.
When key executives are presented with a strong monetary incentive package, they are more likely to stay and utilize their talents where they feel appreciated and appropriately rewarded. Structured incentive plans can help keep key executives in place and motivate them to higher levels of performance.
Plans such as Nonqualified Deferred Compensation, Executive Bonus, and Split Dollar Life Insurance are life insurance-based plans that enable the business to offer current and future benefits to their key executives in exchange for their continued service for a specified period of time.
For more information on Business Owner Planning, please contact us today.
Avantax Wealth Management℠ is the holding company for the group of companies providing financial services under the Avantax name. Securities offered through Avantax Investment Services℠, Member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services℠. Insurance services offered through licensed agents of Avantax Insurance Agency℠ and Avantax Insurance Services℠. 3200 Olympus Blvd., Suite 100, Dallas, TX 75019, 972-870-6000 Although Avantax Wealth Management℠ does not provide or supervise tax or accounting services, Avantax Representatives may offer these services through their independent outside business. Not all Avantax Financial Professionals are licensed to offer all products or services. Financial planning and investment advisory services require separate licenses. For additional information ask your Financial Professional or contact us toll-free at (888) 438-3781. Check the background of this firm on FINRA's BrokerCheck.